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Northrop Wins Deal to Support Mission Training of U.S. Army

Defense giant Northrop Grumman Corp.’s NOC business segment, Technology Services recently secured a modification contract to support the collective training of Army units in accordance with the Army Force Generation process. Work for this deal is scheduled to be over by Nov 30, 2017.

Valued at $39.1 million, the contract was awarded by the U.S. Army Contracting Command, Fort Eustis, VA. Fiscal 2017 operations and maintenance funds will be utilized to perform the work, which will be executed in Fort Leavenworth, KS.

A Brief Note on Army Training & Northrop

Northrop provides integrated training services, innovative training technologies and subject-matter experts to the U.S. as well as its allied military forces. Mission training includes mission rehearsal, exercises, doctrine development, instruction, curriculum development and virtual constructive-simulations training.

Built on decades of experience, Northrop is at the forefront of developing and field-training solutions for the U.S. Army. Its products and services help train soldiers for full-spectrum operations worldwide. The significant mission-training programs offered by the company to the U.S. Army include the DD J7 Joint & Coalition Warfighting (JCW), Mission Command Training Program, Mission Command Training Support program (MCTSP) and III Corps Mission Command Training Center.

Our View

Northrop’s Technology Services segment is a leading global logistics and sustainment provider, which supports the entire life cycle of civil and defense platforms and capabilities through a range of services, including providing mission readiness and training.

Notably, the company is witnessing robust domestic and international opportunities across its three sectors under the Technology Services segment. Toward this end, Northrop continues to pursue a range of programs, including international opportunities in Australia and the Middle East as well as sustaining opportunities for its international Global Hawks.

Recently, the company started working as an integrated subcontractor to diversified conglomerate — Honeywell International Inc. HON — for the management and operations of Sandia National Laboratories. This, along with contract wins like the aforementioned ones, tends to bolster the service volume for the company, which, in turn, is expected to boost its growth trajectory, going ahead.

Price Performance

Northrop’s stock has gained 19.9% in the last one year, underperforming the Zacks categorized Aerospace–Defense industry’s gain of 25.7%. This could be due to higher operating expenses continuing to partially impact Northrop’s profit margin. Furthermore, in a highly competitive environment, customers might get attracted to similar products offered by its peers at a lower price, which remains a major concern. Northrop faces tough competition from rivals like The Boeing Company BA and General Dynamics Corp. GD, both of which outperformed the broader industry’s gain in the last one year.

Zacks Rank

Northrop currently sports a Zacks Rank #2 (Buy). You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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