Grumman’s sentimental take-off fueled by order backlogs and contract wins

Northrop Grumman’s sentiments have risen, driven by a double digit order backlog growth, contract wins, and the impressive performance of its aerospace and weaponry programs, says GlobalData, a leading data and analytics company.

GlobalData’s Company Filing Analytics platform found that Grumman’s overall sentiment score rose 20% in the fourth quarter (Q4) of 2019 compared to Q3 2019.

Grumman reported a strong 21% year-on-year (y-o-y) order backlog growth in 2019, which piloted sentimental growth. During the year, overall restricted contract wins (valued at US$11bn) caused a rise in order backlogs.

According to Grumman, classified F-35s and E2Ds contract wins drove the sales of the aerospace segment in the quarter. The revenue growth (10% y-o-y) of the aerospace segment also drove Q4 2019 sentiments.

In regards to other contract wins during the quarter, the company was a key part of the US Government’s US$500bn drive to upgrade its nuclear arsenal, by being the lead contractor on the US$50bn B-21 bomber program.

Aurojyoti Bose, Lead Analyst at GlobalData, says: “The double digit order backlog growth is proof of Grumman’s position as a strong defense contractor. Furthermore, Boeing’s struggles translated to Grumman’s gain in the Ground Based Strategic Deterrent (GBSD) contract.”

With Boeing not bidding for the US Air Force GBSD program, Grumman was the only contractor in the race. In December 2019, Grumman won the two decade long US$60bn contract to replace 400 intercontinental ballistic missiles.

Following the announcement, investor sentiments also grew, as the average share price for January 2020 was 9% higher when compared to December 2019. The share price reached highs of US$384.87 during January 2020.

The mentions of ‘GBSD’ in transcripts rose two fold in Q4 2019 when compared to the previous quarter.

Grumman is highly optimistic about its new GBSD contract, while ‘Space’ was the top mention in the Q4 2019 earnings transcript.

The company is focusing on becoming a major space contractor in the future. The February 2020 launch of the futuristic Space Force OmegaA rocket highlights Grumman’s cynosure on its rocket supplier contract with the newly founded (December 2019) US Space Force.

Bose concludes: “NASA has currently outlined US$3.4bn in its FY2021 budget for the development of its lunar Human Landing System, and expects bids from Blue Origin (with Lockheed and Grumman), Dynetics, Boeing and SpaceX. As Grumman achieved a successful rocket launch in February 2020, it will be captivating if the company wins the contract to boost its space journey.”

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