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Tickers in this Article: NOC, LMT, HII, EADSY
Northrop Grumman Corporation's (NOC) airport systems business in Europe clinched a contract for the supply of Passenger Flow modules to U.K. based East Midlands Airport Group for an undisclosed amount. The contract will come into effect immediately. The Passenger Flow modules is a part of the company's flagship Airport Realtime Collaboration ("ARC") program. The company's airport systems support business offers software products and services for helping achieve efficiency in airport operations worldwide and is located in Peterborough, U.K.

As per the agreement, Northrop will cater to the passenger software needs of East Midlands Group, a division of the Manchester Airports Group and also provide full support services. The software forecasts passenger counts, flow rates and queue times and is expected to identify optimum staff rosters. In addition to this, the tool gives out real-time estimates of passenger flow.

The Passenger Flow module enhances the Airport Collaborative Decision Making ("A-CDM") ability and aids airport operations to accomplish increased airside capacity, flexibility and efficiency.  

The company's Europe aircraft system group recently delivered the world's first integrated nationwide Internet Protocol (IP)-based VHF solution to Uruguay which offers voice communications to all aircrafts operating in the country.

Northrop Grumman has been lately receiving systems support contracts in its diversified operations. These include a $33 million contract for the delivery of multimode maritime radar systems to the U.S. Navy and a $14.1 million contract to support system development and demonstration phase for the Joint Counter Radio-Controlled Improvised Explosive Device ("RCIED") Electronic Warfare ("JCREW") 3.3 System.

Northrop's strength lies in its lofty backlog of orders which in full year 2012 stands at $40.8 billion. Moreover, its cyber security offering, constant upgrading of defense and homeland security assets, intelligence, surveillance and reconnaissance systems, advanced electronics and software development businesses are expected to be the major top-line churners, going forward.

However, the imminent threat of defense budget cuts by the government, cost overruns and gradual withdrawal of troops from Afghanistan and Iraq are headwinds that will undermine growth. Currently, the company carries a Zacks Rank #3 (Hold).

We presently prefer the Zacks Rank #1 (Strong Buy) stocks, Huntington Ingalls Industries (HII) and European Aeronautic Defence and Space Company (EADSY), as well as the Zacks Rank #2 (Buy) stock Lockheed Martin Corporation (LMT).

Headquartered in Falls Church, VA, Northrop Grumman offers products, services, and solutions in aerospace, electronics, information systems, and technical services worldwide.

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