Defense Contractor Northrop Grumman Corporation (NOC) has won a $427 million U.S. Air Force deal for work toward modifying a previously planned National Polar Orbiting Operational Environmental Satellite System to establish a Defense Weather Satellite System.
Earlier the White House announced on February 1, 2010, that the civil-military weather satellite program was to be dissolved, and that two separate lines of polar-orbiting satellites to serve military and civilian users would be pursued instead. Work on the modification project will be performed by Northrop Grumman Space and Mission Systems of Redondo Beach, California.
In April this year, Northrop Grumman Corporation reported impressive first quarter 2011 adjusted earnings of $1.67 per share compared with the Zacks Consensus Estimate of $1.55 for the quarter. Sales for the reported quarter however decreased 2.6% to $6.73 billion, from $6.91 billion in the year-ago quarter, and were 5.6% lower than the Zacks Consensus Estimate of $7.13 billion.
Northrop Grumman recently separated its Shipbuilding segment through a spin-off. The new company is named Huntington Ingalls Industries Inc. (HII). The business unit had suffered from a slowdown in shipbuilding contracts with increasing competition from rivals.
Post spin-off, Northrop has a strong program portfolio, which is positioned to take advantage of growth in the defense space and is supported by favorable projected revenue from diversified streams.
The positives are nevertheless tempered by apprehensions regarding defense cutbacks on high-cost platform programs, over-exposure to the Department of Defense (DoD) budget, lower backlog, cost over-runs and substantial exposure to missile-defense-related programs. The company presently retains a short-term Zacks #4 Rank (Sell) that corresponds with our long-term Neutral recommendation on the stock.
Los Angeles-based Northrop Grumman Corporation is the third largest defense contractor after The Boeing Company (BA) and Lockheed Martin Corporation (LMT) in the U.S. in terms of trailing twelve months sales. The company supplies a broad array of products and services to the U.S. DoD, including electronic systems, information technology, aircraft, space technology and systems integration services.
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