Northrop Inaugurates IRCM Center - Analyst Blog

Northrop Grumman Corporation (NOC) announced the inauguration of its new infrared countermeasures (IRCM) sustainment center in Warner Robins, Ga.

The facility will help the company’s customers to lower their costs and provide high-quality IRCM services. The center will primarily focus on the repair of IRCM equipment for the U.S. Air Force’s large aircraft infrared countermeasures and U.S. Special Operations Command’s directed energy infrared counter measures.

The repair team will include Northrop Grumman; SELEX Galileo Ltd., Edinborough, Scotland; AAR Corp, Wood Dale, Ill.; and Robins Air Force Base’s Aerospace Sustainment Directorate.

Northrop Grumman is one of the largest defense contractors in the U.S. and continues to benefit from high defense spending. The company has a diversified portfolio of programs with strong order bookings and order backlog, consistent cash flow generation and focus on shareholder value.

Ending the second quarter of 2010, the company’s reported earnings per share from continuing operations soared 107.1% year over year to $2.34 compared with $1.13 in the second quarter of 2009. Sales jumped 3.3% year over year to $8.8 billion from $8.5 billion in the year-ago quarter. The company’s total backlog reached $66 billion exiting the second quarter, while new business awards were roughly $6.5 billion.

Being optimistic, the company raised its full-year 2010 revenue guidance from $34,500 million to $34,800 million and diluted earnings per share guidance from $5.75–$6.00 to $6.60– $6.80. However, the free cash flow target was lowered from $1,700–$2,200 million range to $1,500–$2,000 million range.

Prime competitors of the company include Boeing Co. (BA), General Dynamics Corp. (GD), and Lockheed Martin Corporation (LMT). We are currently maintaining a Neutral recommendation on Northrop.