Northrop Wins a Contract for Active Electronically Scanned Array Radars

Northrop Grumman Corp.’s NOC business unit, Northrop Grumman Systems, recently secured a modification contract to supply active electronically scanned array (AESA) radars for the U.S. Air Force’s F-16 aircraft fleet. The award has been offered by the Air Force Life Cycle Management Center, Wright-Patterson Air Force Base, OH.

Details of the Deal

Valued at $30 million, this contract is projected to be completed by May 30, 2031. Work related to this deal will be executed in Linthicum Heights, MD. 

The latest modification brought the total face value of the agreement to $1.67 billion.

NOC Stock’s Place in the Radar Market

Northrop is a prominent player in the radar market. Its Mission Systems business segment offers multiple radars and associated products like the Scalable Agile Beam Radar, F-35 fire control radar and Distributed Aperture System, Ground/Air Task Oriented Radar (G/ATOR,) APR-39 DV(2) and EV(2) Radar Warning Receiver programs and a few more. 

As far as its expertise in AESA radar is concerned, Northrop has been at the forefront of AESA innovations for more than 60 years. Its well-earned expertise in AESA fire control radars helps provide air-to-air, air-to-ground, land and sea superiority for the world’s armed forces. Impressively, the company’s airborne fire control radars are used in the U.S. Air Force’s 5th generation fighter platforms, the F-22 Raptor and the F-35 Lightning II, apart from F-16 jets. 

This surely reflects the solid demand that Northrop’s AESA enjoys in the U.S. military aerospace industry. The latest contract win is yet another example of that.

Growth Opportunities for NOC Stock

With widespread geopolitical tensions engulfing the global peace map in recent years, resulting in cross-border conflicts as well as civil unrest within a nation, multiple nations have been investing significantly to effectively strengthen their military arsenal. As radars constitute a crucial component of this arsenal, rising defense spending has also been boosting investments in radar manufacturing and associated components. The growth prospects for the radar market thus remain bright. 

This must have prompted the Markets and Markets firm to project a CAGR of 5.2% for the global military radar market in the 2024-2029 period. Such growth projections bode well for prominent radar manufacturers like NOC.

In addition to being a prime provider of AESA radars, Northrop develops radar systems that support complex missions at sea and counter increasingly sophisticated anti-ship threats. Its AN/SPQ-9B is a multimode X-band pulse Doppler radar that detects all known and projected sea-skimming missiles. The company also offers land-based radars like AN/TPS-80 G/ATOR, HAMMR and the AN/TPS-80 Long Range Radar, which provide a complete, operational picture and unambiguous view of the battlespace to help warfighters make better decisions.

NOC Stock’s Peer Prospects

Other prominent radar manufacturers that are expected to benefit from the aforementioned growth opportunities offered by the global military radar market are discussed below:

RTX Corp. RTX: Its product portfolio consists of varied radars like integrated air and missile defense radars, ballistic missile radars, surveillance radars and air dominance radars. RTX’s radars like AN-SPY 6, AN-TPY-2, APG-79 and APG-82 are some of its combat-proven products that enjoy solid demand in the global military radar market.

RTX boasts a long-term earnings growth rate of 10.4%. The Zacks Consensus Estimate for RTX’s 2024 sales implies an improvement of 7% from the 2023 reported figure.   

Lockheed Martin LMT: Its radars are chosen by more than 45 countries across six continents. AN/APY-9 Radar, the AN/TPQ-53 Radar System, SPY-7, TPS-77 and Sentinel A4 are some of the company’s combat-proven products that enjoy solid demand in the global military radar market.

LMT boasts a long-term earnings growth rate of 4.7%. The Zacks Consensus Estimate for LMT’s 2024 sales implies an improvement of 5.3% from the 2023 reported figure.   

L3Harris Technologies LHX: It is a renowned manufacturer of radars. The company manufactures combat-proven radars like SPS-48 land-based surveillance radar, AN/APY-11 Multimode radar, Tactical Air Surveillance radar, AN/SPS-48G Long range 3D surveillance radar and many more.  

L3 Harris boasts a long-term earnings growth rate of 8.9%. The Zacks Consensus Estimate for LHX’s 2024 sales implies an improvement of 9.6% from the 2023 reported figure.

NOC Stock’s Price Movement

Shares of Northrop have rallied 19.4% in the past year compared with the industry’s growth of 14.3%.

Image Source: Zacks Investment Research

Zacks Rank

Northrop currently has 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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