Falls Church, VA-based Northrop Grumman Corp.’s NOC Technical Services segment recently won an U.S. air force contract valued at $401 million. This is an indefinite-delivery requirements contract for spares, repairs and engineering services.
Expected to be completed by May 30, 2020, the contract work will be performed at Linthicum Heights and Baltimore, MD; Warner Robins, GA; and Rolling Meadows, IL. Foreign military sales are currently not a part of the contract; however, they may be included in the near future.
In the first quarter of 2015, Northrop’s Technical Services division reported quarterly sales of $0.77 billion, up 10.5% year over year owing to growth in international programs and higher inter-company sales.
Total order backlog as of Mar 31, 2015 was $38.4 billion, up 0.5% from $38.2 billion as of Dec 31, 2014. First-quarter new awards totaled $6.1 billion and book-to-bill ratio was 103%. Technical Services segment booked a large international order at the beginning of 2015 and it had a book-to-bill of 1.90 at the end of Mar, 2015.
Moreover, on an encouraging note, Northrop Grumman has raised its earnings guidance for 2015 to a range of $9.40–$9.60 per share from an earlier forecast of $9.20 to $9.50. The company’s product innovation and focus on strengthening its intelligence, surveillance and reconnaissance or ISR wing should help maintain a stable earnings stream going forward, in light of the changing needs of the defense landscape.
The aerospace and defense major recently increased its quarterly dividend by 10 cents. The revised dividend of 80 cents per share will be payable on Jun 17, 2015, to shareholders of record at the close of business on Jun 1.
Zacks Rank
Northrop Grumman currently carries a Zacks Rank #2 (Buy). Some other stocks that look attractive in the aerospace and defense industry are General Dynamics Corporation GD, Leidos Holdings, Inc. LDOS and Raytheon Company RTN. All three stocks also hold a Zacks Rank #2.
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