The Zacks Analyst Blog Highlights: Northrop Grumman, Lockheed Martin,
Honeywell International, Embraer and General Dynamics
CHICAGO, Oct. 16, 2012
CHICAGO, Oct. 16, 2012 /PRNewswire/ --Zacks.com announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include Northrop Grumman Corporation
(NYSE:NOC), Lockheed Martin Corporation (NYSE:LMT), Honeywell International
Inc. (NYSE:HON), Embraer SA (NYSE:ERJ) and General Dynamics Corporation
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from the Pros newsletter: http://at.zacks.com/?id=5513
Here are highlights from Monday's Analyst Blog:
Northrop to Upgrade Bombers
Northrop Grumman Corporation (NYSE:NOC) was awarded a $108 million contract by
the U.S. Air Force to upgrade its fleet of B-2 stealth bombers. There are 20
B-2s in the U.S. fleet, with 19 at Whiteman Air Force Base in Missouri and 1
used for flight testing at Edwards Air Force Base in California. The contract
covers new software and hardware that increases the processing power of the
plane, creating a more advanced communications suite.
While Northrop is the prime contractor for installation, the parts for the
upgrade were designed with a number of partners. The upgrade will include a
processing unit designed by Lockheed Martin Corporation (NYSE:LMT) and a disk
drive unit developed by Honeywell International Inc. (NYSE:HON). To support
the new processing units, Northrop is also installing a network of fiber-optic
cables inside the bomber.
Going forward, Northrop Grumman's strong balance sheet and cash flows provide
substantial financial flexibility and a cushion for improving shareholder
value through incremental dividend, ongoing share repurchases and earnings
accretive acquisitions. In the second quarter of 2012, the company repurchased
4.9 million shares for approximately $295 million. At the end of the first
half of 2012, the company had a low long-term debt-to-capitalization of 26.5%.
Total long-term debt was approximately $3.9 billion, with no significant
maturities in the near term, along with cash holdings of $3.1 billion.
Falls Church, Virginia-based Northrop Grumman Corporation is one of the
largest defense contractors in the U.S. The company supplies a broad array of
products and services to the U.S. Department of Defense including electronic
systems, information technology, aircraft, space technology, and systems
integration services. The positive case for Northrop Grumman stems from
revenue growth across the board and a broad diversification of programs.
Northrop Grumman offers a strong program portfolio positioned to take
advantage of focus areas in the defense space, an improving balance sheet and
an ongoing share repurchase program. Also, its product line in high priority
categories, such as defense electronics, unmanned aircraft and missile
defense, gives Northrop Grumman an edge over competition.
Northrop Grumman's backlog is expected to see further upside in the near
future through unmanned aerial vehicle (UAV) platforms, including Broad Area
Maritime Surveillance (BAMS), Fire Scout and Navy Unmanned Combat Air System
Going forward, Northrop Grumman offers a strong program portfolio positioned
to take advantage of focus areas in the defense space, an improving balance
sheet and an ongoing share repurchase program.
However, these are offset by apprehension regarding defense cutbacks on
high-cost platform programs, over-exposure to the DoD budget, lower backlog,
cost over-runs and reductions in Afghanistan and Iraq operations.
Like its peers, Embraer SA (NYSE:ERJ) and General Dynamics Corporation
(NYSE:GD), the company presently retains a short-term Zacks #3 Rank (Hold)
that corresponds with our long-term Neutral recommendation on the stock.
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