Tag Archives: Northrop Grumman

Will Sequestration Sink General Dynamics' Aegis Destroyer?

By Katie Spence, The Motley Fool

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Sequestration’s in full swing, and it’s putting a kink in the Navy’s ship-buying plans. Before sequestration took effect, the Navy signed a multi-year procurement contract, which saved money by buying ships in bulk. Now, however, the defense budget has been cut, and that contract’s in jeopardy. This is bad news for defense contractors on the DDG 51 Aegis Destroyer contract and could also be bad news for investors. Here’s what you need to know.

U.S. Navy photo by Paul Farley. Public domain, via Wikimedia Commons

Who builds what
Both General Dynamics‘ Bath Iron Works shipbuilding company and Huntington Ingalls Industries‘ Ingalls Shipbuilding build the DDG 51 Aegis Destroyer, with the Navy typically buying ships from each builder.

In a move to save money, the Navy signed a 30-year shipbuilding plan that saw the purchase of 10 Aegis Destroyers for the price of nine. It also increased the Navy’s shipbuilding budget from $15 billion to almost $19 billion annually. Now, Rep. Randy Forbes (R-Va.), chairman of the House Armed Services Committee, has expressed grave concerns about funding the 30-year plan and has asked the Navy for “a scintilla of evidence” that it can be done.  

One of the reasons the Navy’s costs are so astronomical is that the service also has to replace the Ohio, a nuclear-capable submarine dating to the 1980s. Adm. Jonathan Greenert, chief of Naval operations, has stated, “People ask me what is my No. 1 program of concern, and I will tell you it’s the Ohio replacement program.” Not only is the Ohio outdated, but the replacement program will also provide 70% of the United States‘ nuclear deterrent capabilities.  

With the price of the new subs and the need for new ships, the Navy is seeing its costs escalating, which of course conflicts with the 10-year, $500 billion cut to defense spending under sequestration . 

Will the Navy remain mission-capable?
Ships aren’t the only area where the Navy is seeing cuts; the service was also planning on purchasing one P-8A maritime surveillance plane from Boeing , one E-2D Hawkeye battle management aircraft and two unmanned Fire Scout helicopters from Northrop Grumman , and one F-35C carrier fighter from Lockheed Martin — all of which face being cut.  

Clearly, this is all bad news for defense contractors. It’s also bad news for the Navy, as it relies on these systems to remain mission-ready.

What now?
What’ll happen to the Aegis Destroyer contract remains to be seen, but it’s not looking great. If it does get cut, General Dynamics and Huntington Ingalls could see their stocks suffer. On the other hand, that might end up being a great time to load up on defense stocks at a discounted rate. Yes, sequestration is hurting defense, and contracts are being cut, but as I’ve said before, defense contractors are essential to the military. Consequently, while defense contractors may be hampered in the short term, in

Source: FULL ARTICLE at DailyFinance

Why Lockheed Martin Is Poised to Pop

By Brian Pacampara, The Motley Fool

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Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool’s free investing community, defense contracting giant Lockheed Martin has earned a respected four-star ranking.

With that in mind, let’s take a closer look at Lockheed and see what CAPS investors are saying about the stock right now.

Lockheed facts

Headquarters (founded)

Bethesda, Md. (1909)

Market Cap

$30.8 billion

Industry

Aerospace and defense

Trailing-12-Month Revenue

$47.2 billion

Management

CEO Marillyn Hewson (since January 2013)

CFO Bruce Tanner (since September 2007)

Return on Equity (average, past 3 years)

32.1%

Cash/Debt

$1.9 billion / $6.3 billion

Dividend Yield

4.9%

Competitors

Boeing

Northrop Grumman

Raytheon

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 94% of the 1,906 members who have rated Lockheed believe the stock will outperform the S&P 500 going forward.

Just yesterday, one of those Fools, jukebox71, highlighted Lockheed as a particularly refreshing opportunity: “[A] dirt cheap P/E, a solid dividend, AND they have solved one of the greatest threats to the existence of mankind: cheap desalinated water. [F]or all the garbage in the news, [Lockheed’s] efforts to bring fresh water to the masses reminds me that there is still a lot of good in the world.”

If you want market-beating returns, you need to put together the best portfolio you can. Of course, despite a strong four-star rating, Lockheed may not be your top choice.

We’ve found another stock we are incredibly excited about — excited enough to dub it “The Motley Fool’s Top Stock for 2013.” We have compiled a special free report for investors to uncover this stock today. The report is 100% free, but it won’t be here forever, so click here to access it now.

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.

The article Why Lockheed Martin Is Poised to Pop originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool owns shares of Lockheed Martin, Northrop Grumman, and Raytheon Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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Drexel Hamilton Upgrades Defense Stocks As Sequestration Threat Diminishes

By David M. Ewalt, Forbes Staff

Drexel Hamilton analysts upgraded a trio of defense industry stocks on Thursday morning, arguing that the sector has fared well through the ongoing U.S. government budget battle, and that spending cuts have not been as bad as expected. General Dynamics F-16A in flight. (Photo credit: Wikipedia) The equity research firm bumped up Northrop Grumman from sell to hold, setting a $70 price target; Lockheed Martin was upgraded from sell to hold, with a $90 price target; and General Dynamics was upgraded from sell to hold, with a $65 price target.

From: http://www.forbes.com/sites/davidewalt/2013/04/11/drexel-hamilton-upgrades-defense-stocks-as-sequestration-threat-diminishes/

Northrop Wins $53 Million for Computer, Air Defense Work

By Rich Smith, The Motley Fool

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Northrop Grumman came away with more contract wins than anyone else Tuesday on the Pentagon’s supplier list, scoring two contracts worth nearly $53 million, combined.

The larger of the two contracts, worth $40.5 million, tasks Northrop’s Information Systems division with performing research and development, enhancement, integration, deployment and sustainment work related to the Secure Access Baseline for the EnterpRise (SABER) initiative for the Air Force Intelligence, Surveillance and Reconnaissance Agency, the Department of Homeland Security, the Defense Intelligence Agency, and other intelligence community and Department of Defense customers. Northrop has an April 9, 2018, completion date for this work.

The company also won a $12.4 million contract to extend by four months its work on the Counter Rocket Artillery Mortar (C-RAM ) Command and Control System. C-RAM is a system that integrates the military’s existing field artillery and air defense sensors with a commercial off-the-shelf warning system and a Navy-designed interceptor rocket to shoot down incoming indirect fire rounds — mortars, artillery shells, and the like.

According to the Pentagon, counting the instant extension, Northrop’s underlying C-RAM contract is now worth $156 million.

 

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The article Northrop Wins $53 Million for Computer, Air Defense Work originally appeared on Fool.com.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Northrop Grumman. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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Source: FULL ARTICLE at DailyFinance

War With Wicked Lasers: The U.S. Navy Goes High-Tech

By Tim Beyers and Erin Miller, The Motley Fool

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Soon, somewhere in the waters of the Middle East, ships will be blasting missiles out of the sky with lasers. Yes, you read that right. The U.S. Navy has already outfitted the fantail of transport ship USS Ponce with a solid-state fiber laser capable of destroying drones in flight.

Why should investors care? In the following interview with The Motley Fool’s Erin Miller, Tim Beyers of Motley Fool Rule Breakers and Motley Fool Supernova says the technology is reminiscent of IPG Photonicspioneering work in fiber lasers. He also says the breakthrough could put pressure on Navy contractors such as Northrop Grumman to develop new ships capable of carrying laser weapons systems.

Please watch this short video to get Tim’s full take, and then leave a comment to let us know what you think of the Navy’s efforts to bring a little sci-fi action to its fleet.

What macro trend was Warren Buffett referring to when he said “this is the tapeworm that’s eating at American competitiveness”? Find out in our free report: “What’s Really Eating at America’s Competitiveness.” You’ll also discover an idea to profit as companies work to eradicate this efficiency-sucking tapeworm. Just click here for free, immediate access.

The article War With Wicked Lasers: The U.S. Navy Goes High-Tech originally appeared on Fool.com.

Fool contributor Tim Beyers is a member of the 
Motley Fool Rule Breakers
stock-picking team and the Motley Fool Supernova Odyssey I mission. Neither he nor Erin Miller owned shares in any of the companies mentioned in this article at the time of publication. Check out Tim’s Web home and portfolio holdings, or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.The Motley Fool recommends and owns shares of IPG Photonics and Northrop Grumman. Try any of our Foolish newsletter services free for 30 days. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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Source: FULL ARTICLE at DailyFinance

Northrop Wins $71 Million in Global Hawk Orders

By Rich Smith, The Motley Fool

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Northrop Grumman , one of the biggest winners in the Air Force‘s seismic shift toward unmanned airplanes, increased its lead even further Tuesday.

According to the company, Northrop has just been awarded an “undefinitized” contract worth $71 million, as the USAF retains the company’s services to “provide engineering support for the production and final acceptance testing of … Lot 10” Global Hawk drones. (Lot 10 refers to the sequential order number of batches of new Global Hawks bought by the Air Force.)

Northrop’s tasks will include supporting “program management, engineering, and flight operations necessary to complete Lot 10 aircraft and sensor deliveries, which will include” two Block 30 Global Hawk aircraft, two more advanced Block 40 drones, and retrofits of advanced sensors upon a further three drones from previous “lots” purchased.

Northrop expects all work on this contract modification to be complete by the end of next year.

Northrop shares declined 0.2% in Tuesday trading despite the Global Hawk news, closing at $71.56.

The article Northrop Wins $71 Million in Global Hawk Orders originally appeared on Fool.com.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Northrop Grumman. Try any of our Foolish newsletter services free for 30 days. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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It's a Brave New World for the Drone-Makers

By Rich Smith, The Motley Fool

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On March 26, the U.S. Navy announced plans to award four firm-fixed-price contracts to develop prototype Unmanned Carrier-Launched Airborne Surveillance and Strike (UCLASS) drones. This is on top of a similar project, already in the works, to develop a fleet of Unmanned Combat Air Systems (UCAS).

Billions of dollars are at stake as each of Boeing , Northrop Grumman , Lockheed Martin , and General Atomics lock their targeting radars on these contracts. Who will emerge victorious? With the Pentagon set to spend $5.6 billion on drone purchases this year alone, and more in years to come, it’s a question worth asking, and a trend in weapons purchases worth watching.

Motley Fool contributor Rich Smith explains in the following video.

Boeing operates as a major player in a multi-trillion-dollar aerospace market in which the opportunities and responsibilities are absolutely massive. However, emerging competitors and the company’s execution problems have investors wondering whether Boeing will live up to its shareholder responsibilities. In our premium research report on the company, two of The Motley Fool‘s best minds on industrials have collaborated to provide investors with the key, must-know issues surrounding Boeing. They’ll be updating the report as key news hits, so don’t miss out — simply click here now to claim your copy today.

var FoolAnalyticsData = FoolAnalyticsData || []; FoolAnalyticsData.push({ eventType: “TickerReportPitch”, contentByline: “Rich Smith“, contentId: “cms.29785”, contentTickers: “NYSE:BA, NYSE:LMT, NYSE:NOC”, contentTitle: “It’s a Brave New World for the Drone-Makers”, hasVideo: “True”, …read more

Source: FULL ARTICLE at DailyFinance

Pentagon Awards $38 Million for Biometric and Anti-Missile Work

By Rich Smith, The Motley Fool

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On Thursday, the Department of Defense announced the award of several small (in defense industry terms) contracts to a handful of companies. Collectively, the awards add up to $38 million in value. Individually, they break down as follows:

  • EADS was awarded a $21 million modification to a previously awarded firm-fixed-price contract to supply “security and support mission equipment package production cut-in services” to the U.S. Army. According to DoD, with this modification, the value of EADS‘s initial contract win has risen to $2.26 billion.
  • CACI won a $9.7 million modification to a firm-fixed-price contract for the provision of “program management and engineering services” supporting DoD biometric programs. The total cumulative face value of the underlying contract has now risen to $43.4 million. 
  • Lockheed Martin was awarded $7.3 million as a modification to its contract to incorporate Large Aircraft Infrared Countermeasures (LAIRCM) NexGen Sensors onto HC/MC-130J aircraft Super Hercules transport aircraft. LAIRCM is a laser-based aircraft anti-missile defense mechanism being developed by Northrop Grumman for the Air Force. It involves mounting hi-intensity lasers on an aircraft, which lasers are then used to disable incoming missiles. Lockheed’s work, installing the system on the Super Hercules planes, should be complete by Oct. 15, 2015.

The article Pentagon Awards $38 Million for Biometric and Anti-Missile Work originally appeared on Fool.com.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Lockheed Martin and Northrop Grumman. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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2013 Global Product Data Interoperability Summit Expands, Now Open to More Vendors

By Business Wirevia The Motley Fool

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2013 Global Product Data Interoperability Summit Expands, Now Open to More Vendors

Held two months earlier in a larger venue, the Boeing, Northrop Grumman, and Elysium event focuses on boosting productivity through the use of common data streams

SOUTHFIELD, Mich.–(BUSINESS WIRE)– The Boeing Company (NYS: BA) , Northrop Grumman Corporation (NYS: NOC) , and Elysium Inc. will hold the fifth joint Global Product Data Interoperability Summit (GPDIS), on September 9-12, at the Sheraton Wild Horse Pass Resort in Chandler, AZ. The theme of this year’s Summit is “Enabling Productivity with Common Data Streams.”

The annual Global Product Data Interoperability Summit attracts experts and vendors from major industries, including aerospace, defense and automotive. (Photo: Business Wire)

The event functions as a communications hub for industry professionals to exchange ideas, solutions, and methods for improving product data quality and interoperability, with the goal of driving common standards adoption in global aerospace, automotive and other industries.

The growing popularity of the GPDIS has led to it being held two months earlier than in previous years, and in a larger venue to accommodate more vendors/sponsors. The event is held at no cost to industry professionals and supply chain partners in aerospace, automotive, related industries, and academia.

“This year we have more room to showcase an even wider range of the latest technologies that address the business challenges of CAD/CAM/CAE data exchange,” says GPDIS executive management team member and event organizer Ken Tashiro, Vice President and COO of Elysium Inc. Vendors/solutions providers are also sponsors, which provides their teams with an opportunity to present at the event (if abstracts are submitted before the June 14 deadline, and approved) along with exhibit booth privileges and accommodation discounts.

The GPDIS executive committee of Boeing, Northrop Grumman, and Elysium will kick off the summit with early-bird sessions the first day, followed by three days of technical presentations.

“Fundamentally, being able to provide product information as needed by the end users, without having to do transformations and conversions, is the key challenge facing us going forward,” says Nancy Bailey, vice president of IT at Boeing. “This is why this summit is so important, as it creates a forum for us to come together and get deep into those technical discussions around what …read more
Source: FULL ARTICLE at DailyFinance

Pentagon Announces $445 Million in "April Fool's" Contracts

By Rich Smith, The Motley Fool

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One full month into a “sequester” that was supposed to gut U.S. defense spending, the Pentagon just awarded a few of its favorite contractors some $445 million in new defense contracts. And this being April Fool‘s Day, let’s make this clear: No joke.

Among the winners today were:

  • Northrop Grumman , winner of one of the larger awards with a $47.8 million firm-fixed-price contract to provide logistical support to Air Force C-20 passenger aircraft operating out of Ramstein Air Base in Germany, Andrews Air Force Base in Maryland, Sigonella Air Base in Italy, and Kaneohe Bay Air Force Base in Hawaii. This contract runs through June 31.
  • Rockwell Collins , which won a firm-fixed-price, sole-source contract worth up to $16.2 million to supply spare parts for Air Force C-17 transport planes. This contact should be completed by Jan. 31, 2018.
  • Huntington Ingalls , which got an $18.2 million modification to a previously awarded contract for “special tooling, special test equipment, and supplier related vendor support services” needed to continue building the nuclear aircraft carrier USS Gerald R. Ford. Huntington should have the equipment in hand by September 2015 — the same year the Ford is expected to enter service with the U.S. Navy.
  • Lockheed Martin‘s Mission System and Training division, which won $17.1 million in a cost-plus-award-fee order under a previously awarded basic ordering agreement. Lockheed will be assisting the Navy in post-shakedown work on the new USS Fort Worth Littoral Combat Ship, designated LCS 3. Lockheed’s work should be performed by July.
  • General Dynamics‘ Electric Boat, which was awarded an $11.8 million cost-plus-fixed-fee modification to a previously awarded contract funding the purchase of onboard repair parts for Virginia-class nuclear fast attack submarines. This work should be completed by August 2016.

The article Pentagon Announces $445 Million in “April Fool’s” Contracts originally appeared on Fool.com.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of General Dynamics, Huntington Ingalls Industries, Lockheed Martin, and Northrop Grumman. Try any of our Foolish newsletter services free for 30 days. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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Booz, Northrop, and CSC Win $123.2 Million in USAF Contracts

By Rich Smith, The Motley Fool

Filed under:

The Department of Defense announced a series of new defense contracts benefiting the U.S. Air Force on Friday, with publicly traded companies reaping more than $123 million in awards, including:

  • Booz Allen Hamilton , which was awarded a $59.4 million contract modification to provide “additional systems engineering and integration support for launch test and range system programs” for the U.S. Air Force through Dec. 2.
  • Northrop Grumman , whose Technical Services division won a $47.8 million firm-fixed-price contract to provide follow-on support for DoD C-20 passenger aircraft operated by the Air Force. This work is expected to be completed by June 31.
  • Computer Sciences , whose DynCorp International subsidiary won a $16 million sole-source, short term bridge contract for unspecified “aircraft maintenance support services.” Completion date: July 31.

The article Booz, Northrop, and CSC Win $123.2 Million in USAF Contracts originally appeared on Fool.com.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Northrop Grumman. Try any of our Foolish newsletter services free for 30 days. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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Pentagon Awards $67.7 Million in Army Contracts

By Rich Smith, The Motley Fool

Filed under:

The Department of Defense announced a series of new defense contracts benefiting the U.S. Army on Wednesday, with publicly traded companies reaping nearly $68 million in awards, including:

  • L-3 Communications‘ National Security Solutions subsidiary was awarded an $8.4 million firm-fixed-price contract to provide “enterprise service support for the entire National Capital Region.” This contract runs through March 29, 2014.
  • Boeing won a $12.1 million cost-plus-fixed-fee contract to support the “generation three electronic control unit upgrade and the installation of the AVR-2B Laser Warning System.” AVR-2B is a product of Goodrich — now a subsidiary of United Technologies — designed to alert U.S. forces when they have been illuminated by hostile laser rangefinders, target designators, or similar laser-aided targeting systems, and indicate the direction from which the laser designator originated. Boeing’s work on this project is expected to be complete by March 25, 2015.
  • Northrop Grumman‘s Space and Mission Systems division won a $24.4 million time-and-materials contract, extending by one year (through March 25, 2014) its contract to support the U.S. Air and Missile Defense Planning and Control System (AMDPCS), a system Northrop began bringing on line in 2007.
  • Esterline Technologies subsidiary Armtec Countermeasures Co. was awarded a $22.8 million firm-fixed-price contract to procure additional M206, MJU-7A/B and MJU-10/B infrared countermeasure flares (used to distract enemy anti-aircraft missiles). Armtec will deliver these flares by Feb. 28, 2015.

link

The article Pentagon Awards $67.7 Million in Army Contracts originally appeared on Fool.com.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of L-3 Communications Holdings and Northrop Grumman. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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How Dividends Change the Game for Boeing

By Anders Bylund, The Motley Fool

BA Dividend Chart

Filed under:

The wealth-building power of compound interest will never cease to amaze me. It’s a story of patience and attention to detail, where small, short-term differences add up to massive divergence over decades. And in the end, the biggest winners don’t always deliver the fattest share-price returns.

Aircraft builder and military contractor Boeing was a modest dividend story in the mid-2000s. Share prices were rocketing skyward, and Boeing’s annual payout bumps could barely keep up. Yields hovered just above the 1% mark for four years.

The economic crisis of 2008 hit the reset button on Boeing’s dividends. Increases were put on hold until 2012, but share prices plunged. When all is said and done, Boeing’s current 2.3% yield looks meaty in the context of the stock‘s total dividend history.

BA Dividend data by YCharts

How big of a difference can these payouts really make for income investors? You might be surprised.

Over the last decade, Boeing has crushed its peers on the Dow Jones Industrial Average by more than tripling share prices. But the total return jumps to a quadruple helping when you reinvest dividend checks along the way.

BA data by YCharts.

What’s more, Boeing has plenty of headroom to increase its payouts further. The company spent just $1.3 billion on dividend checks over the last year while collecting $5.9 billion in free cash flows. That’s a slim 22% cash payout ratio.

By comparison, Northrop Grumman spent $535 million on dividends out of a $2.3 billion free cash pool, and Lockheed Martin ‘s dividends accounted for $1.35 billion out of just $619 million of free cash generated. Northrop’s 23% payout ratio is in the same ballpark as Boeing’s, but Lockheed cuts dividend checks faster than it can back them with fresh cash. Yes, Lockheed’s 5% yield looks a lot richer than Boeing’s 2.3%, but I’m not sure I’d bet the house on a negative cash-to-dividends ratio.

Dreamliner troubles notwithstanding, Boeing appears to be the far safer bet, in a virtual deadlock with Northrop Grumman.

Boeing is a major player in a multitrillion-dollar market in which the opportunities are massive. However, emerging competitors and the company’s execution problems have investors wondering whether Boeing will live up to its shareholder responsibilities. In our premium research report on the company, two of The Motley Fool’s best minds on industrials have collaborated to provide investors with the must-know info on Boeing. They’ll be updating the report as key news hits, so don’t miss out — simply click here now to claim your copy today.

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Defense Contractors Win $266 Million in Pentagon Contracts

By Rich Smith, The Motley Fool

Filed under:

The Department of Defense released its daily catalog of defense contracting awards Tuesday evening, totaling $266 million — give or take a few hundred thousand. What follows are the more significant contracts awarded to publicly traded companies:

  • Philips Electronics‘ Medical Systems subsidiary was the biggest winner, landing a fourth option year award on a pre-existing fixed-price with economic-price-adjustment contract for the supply of patient monitoring systems, subsystems, accessories, consumables, spare/repair parts, and training to the military. Total contract value: $77.2 million, with a March 29, 2014, completion date.
  • Xerox was awarded $14.9 million under a previously awarded firm-fixed-price, indefinite-delivery/indefinite-quantity contract. This “modification” extends for six months (to Sept. 30) Xerox’s contract to supply and service copiers aboard Navy ships in port and at sea.
  • Lockheed Martin won not one, but two contracts — a $30.6 million contract to supply low-rate initial production units of an upgraded AN/SLQ-32(V) Electronic Warfare System under Surface Electronic Warfare Improvement Program (SEWIP) Block 2, which runs through September 2014, and also a $17.2 million contract to perform engineering work on AN/SQQ-89 Anti-Submarine Warfare sonar analysis systems. The latter contract concludes in September.
  • Finally, Northrop Grumman was awarded $12.6 million to refurbish fuses on U.S. Air Force intercontinental ballistic missiles. Work on this contract is to be completed by June 30, 2014.

The article Defense Contractors Win $266 Million in Pentagon Contracts originally appeared on Fool.com.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Lockheed Martin and Northrop Grumman. Try any of our Foolish newsletter services free for 30 days. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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Pentagon Pays Northrop $433.5 Million for Drone Work

By Rich Smith, The Motley Fool

Filed under:

On Monday, the Department of Defense announced that it has awarded drone maker Northrop Grumman a contract for $433.5 million. An “(estimated) cost-plus-fixed-fee contract,” this award hires Northrop to provide logistics support for RQ-4 Global Hawk unmanned aerial vehicles through Sept. 30, 2014.

Designated a “HALE,” or high-altitude, long-endurance aircraft, the unarmed Global Hawk is a remotely operated drone designed to take the place of Lockheed Martin‘s piloted U-2 spyplane. It is capable of flying as high as 65,000 feet above sea level at speeds of up to 400 mph, has a range of 12,000 nautical miles, and can stay aloft as long as 35 hours.


 
 

The article Pentagon Pays Northrop $433.5 Million for Drone Work originally appeared on Fool.com.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Lockheed Martin and Northrop Grumman. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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The 5 Best Companies in America: You Won't Know Most of Them

By The Motley Fool

Cummins - Bloomberg News/Tom Strickland

Filed under: , , ,

Tom Strickland, Bloomberg News via Getty Images

There are dozens of ways to evaluate and measure the success of a company — from customer service to employee satisfaction to profits, payouts, peer rankings, and more.

From an investor’s perspective, however, the measures that traditionally receive the most acclaim are rapid earnings growth and a rising stock price.

Too bad this approach to analysis is severely flawed.

Had you based your investing decisions on rapid earnings growth and rising share prices, there would have been no question that Countrywide fit the bill to a T. The nation’s largest mortgage lender certainly delighted its shareholders with huge profits from 2003 to 2006. Alas, the company drove itself into bankruptcy by mistreating its employees, homeowners, and mortgage investors — three key stakeholders in its core business.

On a more mundane level, anyone who’s ever had to deal with a surly checkout clerk can tell you that failing to look after employees and customers can result in lost future business for a retailer.

Of, For, and By the People

A lot of people are involved in a company’s success — or failure. As professor Ed Freeman of the Darden School of Business at the University of Virginia puts it, “Business is about how customers, suppliers, employees, financiers, communities, and managers interact and create value.” Several studies suggest that companies that focus on multiple stakeholders tend to achieve better financial performance over the long term.

So which companies have got the mix right? Which ones are able to benefit all stakeholders?

The Best Company in America Is … What?

For the past several months The Motley Fool has been compiling data and analyzing more than 1,700 public companies to discover the 25 best public companies in America, measured by their success in serving investors, customers, employees, and the world at large.

Some of the names will be familiar to you. Costco earns a spot, as does Aflac, Intel, Whole Foods, Coach, and Starbucks. But there are many you may not have heard of — and as an investor, that’s a shame.

Here are the five that rose to the top of the list. You can get more details on how we made the rankings, and link out to the entire top 25 list from the last slide in our gallery.

%Gallery-181441%

The Motley Fool recommends Apple, Cisco Systems, Cummins, and Teradata. The Motley Fool owns shares of Apple, Cummins, General Electric Company, and Northrop Grumman. Try any of our newsletter services free for 30 days.

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Has Northrop Grumman Become the Perfect Stock?

By Dan Caplinger, The Motley Fool

Filed under:

Every investor would love to stumble upon the perfect stock. But will you ever really find a stock that provides everything you could possibly want?

One thing’s for sure: You’ll never discover truly great investments unless you actively look for them. Let’s discuss the ideal qualities of a perfect stock, then decide if Northrop Grumman fits the bill.

The quest for perfection
Stocks that look great based on one factor may prove horrible elsewhere, making due diligence a crucial part of your investing research. The best stocks excel in many different areas, including these important factors:

  • Growth. Expanding businesses show healthy revenue growth. While past growth is no guarantee that revenue will keep rising, it’s certainly a better sign than a stagnant top line.
  • Margins. Higher sales mean nothing if a company can’t produce profits from them. Strong margins ensure that company can turn revenue into profit.
  • Balance sheet. At debt-laden companies, banks and bondholders compete with shareholders for management’s attention. Companies with strong balance sheets don’t have to worry about the distraction of debt.
  • Money-making opportunities. Return on equity helps measure how well a company is finding opportunities to turn its resources into profitable business endeavors.
  • Valuation. You can’t afford to pay too much for even the best companies. By using normalized figures, you can see how a stock‘s simple earnings multiple fits into a longer-term context.
  • Dividends. For tangible proof of profits, a check to shareholders every three months can’t be beat. Companies with solid dividends and strong commitments to increasing payouts treat shareholders well.

With those factors in mind, let’s take a closer look at Northrop Grumman.

Factor

What We Want to See

Actual

Pass or Fail?

Growth

5-year annual revenue growth > 15%

(3.6%)

Fail

 

1-year revenue growth > 12%

(4.5%)

Fail

Margins

Gross margin > 35%

22.1%

Fail

 

Net margin > 15%

7.8%

Fail

Balance sheet

Debt to equity < 50%

41.4%

Pass

 

Current ratio > 1.3

1.39

Pass

Opportunities

Return on equity > 15%

19.9%

Pass

Valuation

Normalized P/E < 20

9.36

Pass

Dividends

Current yield > 2%

3.2%

Pass

 

5-year dividend growth > 10%

7.8%

Fail

       
 

Total score

 

5 out of 10

Source: S&P Capital IQ. Total score = number of passes.

Since we looked at Northrop Grumman last year, the company has kept its five-point score for the third year in a row. The stock has done reasonably well, rising more than 10% over the past year.

The defense industry has been under siege for years from the threat of budget cuts, and finally, some of those threats have become reality. With sequestration having taken effect, spending cuts …read more
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Pentagon Awards $150 Million to Northrop, Orbital, and NMSU

By Rich Smith, The Motley Fool

Filed under:

On Monday, the Department of Defense awarded $150 million to a trio of vendors through a cost-plus-fixed-fee contract. The contract, awarded severally to the Physical Science Lab at New Mexico State University, Northrop Grumman , and Orbital Sciences , funds unspecified “theoretical studies and engineering research” work to be performed for U.S. Army, Navy, and Air Force research and development programs.

Although not specifically stated in the DOD‘s contract announcement, the contract appears to be an indefinite delivery, indefinite quantity contract, inasmuch as it specifies that “work … will be determined with each order.” This suggests the DOD‘s award is actually an umbrella contract under which specified task orders will be put up for bid, at which point NMSU, Northrop, and Orbital will be able to bid to fulfill said task orders.

One curiosity about the contract is that DOD says “four bids were solicited, with four bids received” for the contract. However, only three winners were named.

This contract runs through March 16, 2018.

The article Pentagon Awards $150 Million to Northrop, Orbital, and NMSU originally appeared on Fool.com.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Orbital Sciences and owns shares of Northrop Grumman. Try any of our Foolish newsletter services free for 30 days. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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Is Lockheed Martin a Cash King?

By Jim Royal, The Motley Fool

Filed under:

As an investor, it pays to follow the cash. If you figure out how a company moves its money, you might eventually find some of that cash flowing into your pockets.

In this series, we’ll highlight four companies in an industry and compare their “cash king margins” over time, trying to determine which has the greatest likelihood of putting cash back in your pocket. After all, a company can pay dividends and buy back stock only after it’s actually received cash — not just when it books those accounting figments known as “profits.”

Today, let’s look at Lockheed Martin and three of its peers.

The cash king margin
Looking at a company’s cash flow statement can help you determine whether its free cash flow backs up its reported profit. Companies that can create 10% or more free cash flow from their revenue can be powerful compounding machines for your portfolio. A sustained high cash king margin can be a good predictor of long-term stock returns.

To find the cash king margin, divide the free cash flow from the cash flow statement by sales:

Cash king margin = Free cash flow / sales

Let’s take McDonald’s as an example. In the four quarters ending in December, the restaurateur generated $6.97 billion in operating cash flow. It invested about $3.05 billion in property, plant, and equipment. To calculate free cash flow, subtract McDonald’s investment from its operating cash flow. That leaves us with $3.92 billion in free cash flow, which the company can save for future expenditures or distribute to shareholders.

Taking McDonald’s sales of $25.5 billion over the same period, we can figure that the company has a cash king margin of about 14% — a nice high number. In other words, for every dollar of sales, McDonald’s produces $0.14 in free cash.

Ideally, we’d like to see the cash king margin top 10%. The best blue chips can notch numbers greater than 20%, making them true cash dynamos. But some businesses, including many types of retailing, just can’t sustain such margins.

We’re also looking for companies that can consistently increase their margins over time, which indicates that their competitive position is improving. Erratic swings in margins could signal a deteriorating business or perhaps some financial skullduggery. You’ll have to dig deeper to discover the reason.

Four companies
Here are the cash king margins for four industry peers over a few periods.

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Source: FULL ARTICLE at DailyFinance

Company

Cash King Margin (TTM)

1 Year Ago

3 Years Ago

5 Years Ago

Lockheed Martin

1.3%

7%

6%

7.9%

Raytheon

6.6%

7.1%

9.8%

4.2%

General Dynamics

7.1%

8.4%

7.7%

9%

Northrop Grumman

9.2%

6.1%

Obama Steps Up to the Plate Against North Korea's Nuclear Threats

By Katie Spence, The Motley Fool

Filed under:

For a while now, I’ve written about how the threats coming from North Korea are a benefit for missile defense, and defense companies. On Friday, that theory was proved correct as the Obama administration announced that it’s beefing up missile defense, even though sequestration has gone into effect. Here’s what you need to know. 

Launch of a Standard Missile-3, 2008. Source: Missile Defense Agency.

When Barack Obama took office in 2009, he stopped the deployment of intercontinental ballistic missile interceptors, which left the total number at 30. However, with escalating threats from North Korea, and the report that North Korea it has advanced its missile capabilities, the Obama administration has reinstated the Bush administration’s missile defense plan. That means missile interceptors will grow to a total of 44.  

The additional interceptors are projected to boost the United States‘ missile defense capabilities by 50% and cost an estimated $1 billion. James Miller, defense undersecretary for policy, said that when North Korea launched a satellite into space, it demonstrated “its mastery of some of the same technologies required for development of an intercontinental ballistic missile.” He also stated: “Our concern about Pyongyang’s potential ICBM capability is compounded by the regime’s focus on developing nuclear weapons. North Korea‘s third nuclear test last month is obviously a serious concern for all nations.” 

Miller also said the increase in interceptors is meant to keep ahead of the growing threat coming from North Korea, and Iran, as the U.S. has to be able to counter multiple missile threats. Furthermore, Defense Secretary Chuck Hagel announced that the U.S. is looking to add a second ballistic missile radar instillation in Japan and that the U.S. will be shifting “resources” to boost funding to Lockheed Martin‘s Aegis Missile defense system. 

The Obama administration and the Pentagon are taking the threats from North Korea and Iran seriously. Along with Lockheed, this is welcome news for Northrop Grumman , the prime contractor on the Missile Defense Agency’s Joint National Integration Center, a simulating and war-gaming center that provides answers for America’s missile defense capabilities. It’s also good news for Boeing , which makes ground-based interceptors — our first line of defense against missiles — and for Raytheon , which builds the SM-3, a defense weapon used to destroy incoming ballistic missiles.  

Kim Jong-un isn’t backing down, and what he’ll do in the future is anyone’s guess. Luckily, America has the ability to defend itself and is increasing its ability to counter further threats. We can hope that’ll be enough to persuade North Korea not to fire at America. But in the meantime, the emphasis on increased defense capabilities is welcome news for defense contractors, and it shows, once again, why they’re essential and great long-term investments.

Boeing operates as a major player in a multitrillion-dollar market in which the opportunities and responsibilities are absolutely massive. However, emerging competitors and the company’s execution problems have investors wondering whether …read more
Source: FULL ARTICLE at DailyFinance