Northrop Grumman Wins a $387M Deal for Upgrading E-2D Advanced Hawkeye
Northrop Grumman Corporation NOC recently secured a modification contract valued at $387.3 million to continue research and development for upgrading the E-2D Advanced Hawkeye. This contract entails Northrop Grumman providing cockpit redesign, which includes navigation, controls and display systems as well as tactical mission computer upgrades.
The award has been provided by the Naval Air Systems Command, Patuxent River, MD. The majority of work related to this contract will be executed in Melbourne, FL. The project is expected to be completed by September 2028.
What’s Favoring NOC?
With countries worldwide enhancing their defense capabilities, spending on advanced military systems, including Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4ISR) technologies, has been rapidly increasing. To this end, it is imperative to mention that NOC is a renowned provider of C4ISR technology, offering critical system upgrades across multiple domains. As a result, it continues to secure a steady flow of orders for its advanced C4ISR capabilities from the Pentagon and U.S. allies, with the latest contract win being a prime example.
NOC’s E-2D Advanced Hawkeye tactical airborne early warning aircraft serves as a game changer in the U.S. Navy's airborne battle command and control management. It helps manage and protect carrier battle groups, providing warfighters with enhanced battlefield awareness, particularly in air and missile defense, by integrating data from multiple sensors. With its advanced radar and network capabilities, the E-2D Hawkeye delivers critical information rapidly, thereby enabling faster decision-making and improving situational awareness during missions.
The C4ISR upgrades, mentioned in the latest contract win, will provide the U.S. armed forces with enhanced information about battle command and control management, thereby boosting their mission readiness.
NOC’s Growth Prospects
Rising military conflicts, terrorism and border disputes have driven nations across the globe to focus more on national security, particularly in strengthening C4ISR capabilities, backed by the growing demand for advanced technologies like network-based battle control, unmanned vehicles and advanced sensor technologies as well as the rising complexity of warfares.
This is likely to have prompted Mordor Intelligence to forecast a compound annual growth rate of 3.2% for the global C4ISR market during the 2024-2029 time period.
This should benefit Northrop Grumman, a prominent forerunner in C4ISR technologies and supporter of military operations worldwide. The company has been delivering end-to-end communications and advanced networking capabilities for the United States and allied military forces operating across multiple battlespace domains for the past 60 years. In this context, it is worth mentioning NOC’s autonomous high-altitude, long-endurance systems, which offer unrivaled situational awareness over land and maritime domains.
Prospects of NOC’s Peers
Other defense companies that are likely to enjoy the perks of the expanding C4ISR market have been discussed below.
Lockheed Martin Corporation LMT: The company provides advanced systems for surveillance, reconnaissance and battle management. One of its key programs includes the Command Control Battle Management Communications, which is the first battle management system capable of integrating across domains.
The company’s long-term (three to five years) earnings growth rate is 4.7%. The Zacks Consensus Estimate for LMT’s 2024 sales indicates year-over-year growth of 5.3%.
RTX Corporation RTX: The company focuses on providing integrated defense systems and radar and missile warning systems that improve situational awareness and threat detection. Its Intelligence, Surveillance and Reconnaissance systems and multi-mission sensors are critical to both U.S. and international defense operations.
The company’s long-term earnings growth rate is 10.4%. The Zacks Consensus Estimate for RTX’s 2024 sales indicates year-over-year growth of 7%.
General Dynamics Corporation GD: The company offers advanced communication systems, command and control solutions and ISR platforms that support military forces worldwide. Notably, its subsidiary in Canada offers the Land C4ISR system to the nation’s armed forces to coordinate and conduct modern operations.
The company’s long-term earnings growth rate is 12.6%. The Zacks Consensus Estimate for GD’s 2024 sales indicates year-over-year growth of 13.5%.
NOC Stock’s Price Movement
Shares of NOC have gained 24.9% in the past three months compared with the industry’s 13.3% growth.
Image Source: Zacks Investment Research
NOC’s Zacks Rank
NOC currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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