2. Northrop Grumman Corporation (NYSE:NOC)
Median Share Price Upside Potential: 8.79%
Total Analysts: 16
Number of Hedge Fund Holders: 49
Weighted Ranking: 2.8
Northrop Grumman is one of the largest defense contractors in the world. The company is the manufacturer of the B-21 Raider for the United States Air Force (USAF), which was formally unveiled in December 2022. The long-range, stealth strategic bomber, intended to replace the aging fleet of the B-1B Lancer and B-2 Spirit, is scheduled to enter service from the mid-2020s onwards.
The company is also a leader in autonomous aerial systems and is the maker of the RQ-4 Global Hawk unmanned aircraft system, which has amassed over 320,000 flight hours, and is noted for its role in surveillance and intelligence operations in Afghanistan, Iraq, and parts of North Africa. In April this year, Northrop Grumman Corporation (NYSE:NOC) was awarded a $387 million foreign military sales contract from the DOD to sustain Italy, Japan, and South Korea’s RQ-4 Global Hawk drones.
It also developed the MQ-4C Triton, which is one of the most advanced maritime ISR UAVs deployed today. The drone has immense export potential. Australia received its first of four ordered Triton drones in June this year, with the remaining three still in production. Kathy Warden, NOC’s Chair, CEO, and President, stated the following about Tritron’s growth prospects in the Q2 2024 earnings call on July 25:
We are excited that both NATO and Norway have expressed interest in Triton, and we are hopeful that announcements will be coming shortly on both. And as we look to build Triton for the U.S. and Australia, this simply adds to the production line outlook for Triton through the decade. And so we had envisioned this day coming where more countries would get the opportunity to see Triton once it was fielded has a tremendous ability to surveil large areas of the ocean. You can think of the relevance to that in the Pacific, which is what was attractive to Australia and the U.S. Navy, but of course, in the Arctic, this is an area of great importance as well, which is driving to NATO and the Norwegian interest.
The company declared its third quarter 2024 results on October 24. It posted sales of approximately $10 billion, up 2% from last year, driven by a surge in demand for advanced weapons amid intense escalations in the Middle East and the Ukraine-Russia war. Aeronautics Systems revenue grew 4% year-over-year to $2.9 billion, with gains attributed to higher F-35, E2, and Triton volumes.
Sales at Defense Systems expanded by 2% due to higher sales of Sentinel and other weapons from NOC’s portfolio. Mission Systems also registered a 7% increase in its sales, fueled by a higher volume of microelectronics and advanced technology programs. As a result, Northrop Grumman Corporation (NYSE:NOC) posted an EPS of $7, comfortably beating expectations of $6.08 per share.
The company reaffirmed its full-year 2024 sales guidance to between $41 billion and $41.4 billion from the second quarter. However, it has raised its MTM-adjusted EPS guidance to be in the range of $25.65 – $26.05, up from $24.90 – $25.30 at the end of Q2. Northrop Grumman Corporation (NYSE:NOC) is one of the best military drone stocks to buy according to analysts, with a consensus among Wall Street experts on its Buy rating.
