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19 Mar 2024

Northrop (NOC) Wins $55M Deal to Support Littoral Combat Ships: Yahoo Finance

Northrop (NOC) Wins $55M Deal to Support Littoral Combat Ships: Yahoo Finance
Northrop Grumman Corporation / All images are for illustrative purposes only.
Originally posted on Yahoo Finance

Northrop Grumman Corp.’s NOC business unit, Northrop Grumman Systems Corp, recently clinched a modification contract to support the Littoral Combat Ship mission module. The award has been offered by the Naval Sea Systems Command, Washington, DC.

Details of the Deal

Valued at $55.2 million, the contract is expected to be completed by March 2025. Per the terms of the deal, Northrop will provide engineering and sustainment support for the Littoral Combat Ship mission module.

The work related to the contract will be carried out at multiple locations across the United States.

What’s Favoring Northrop Grumman?

Nations across the globe are fortifying their defense spending on military weapons and arsenals as they look to strengthen their defense capabilities. This also includes augmented spending on navy combat vehicles for enhanced sea warfare capabilities.

To this end, it is imperative to mention that Littoral combat ships play a critical role in defending a nation, with these being designed to be agile, mission-focused platforms capable of operating in near-shore and open-ocean environments. Therefore, as demand for combat ships is on the rise, so are for littoral combat ships.

In this regard, according to a report by the Mordor Intelligence firm, the global naval combat system market is likely to witness a CAGR of more than 2.5% during the 2024-2029 period. This is likely to benefit Northrop, considering its multi-domain maritime capabilities that enable current and future maritime missions.

Northrop Grumman delivers components like Airborne LASER Mine Detection System, Surface Electronic Warfare Improvement Program Block III, Fire Scout and bridge and navigation systems for both the
Freedom and Independence variants of littoral combat ships.

Considering the naval combat system market’s growth prospects and Northrop’s expertise in providing various support services for military ships, the company may witness a significant order flow, like the latest one. This will continue to boost its revenue generation prospects, with the Navy comprising 15% of NOC’s total sales during 2023.

Peer Prospects
Considering the solid growth opportunities offered by the global naval combat system market, other defense primes like Lockheed Martin LMT, General Dynamics GD and Huntington Ingalls Industries HII, with a strong presence in this space, should also benefit.

Lockheed Martin’s Rotary and Mission Systems designs, manufactures, services and supports various surface ships. Its Freedom-variant littoral combat ship is a resilient, flexible warship, designed from the keel up to affordably take on new capabilities, including advanced sensors, missiles and cutting-edge cyber systems.

LMT boasts a long-term (three-to five-years) earnings growth rate of 4.2%. The Zacks Consensus Estimate for 2024 sales implies growth of 2.4% from the prior-year figure.

General Dynamics’ Marine Systems segment is the leading designer of surface combatant and auxiliary ship design and construction for the U.S. Navy. Moreover, the core mission system of the U.S. Navy's Independence-variant littoral combat ship is built on General Dynamics' computing infrastructure.

GD boasts a long-term earnings growth rate of 10.8%. The Zacks Consensus Estimate for 2024 sales implies growth of 10.1% from the prior-year figure.

Huntington Ingalls’ Ingalls Shipbuilding and Newport News Shipbuilding segments design and construct non-nuclear ships for the U.S. Navy and the U.S. Coast Guard. Its portfolio includes amphibious assault ships, expeditionary warfare ships, surface combatants and national security cutters.

HII boasts a long-term earnings growth rate of 6.5%. The Zacks Consensus Estimate for 2024 sales implies growth of 2% from the prior-year figure.

Read original article here. 

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