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How Many Drones Can the U.S. Navy Buy From Northrop Grumman for $267.2 Million?
NOCNorthrop Grumman(NOC) The Motley Fool·2025-03-29 14:10

Core Insights - Northrop Grumman is experiencing significant cost overruns in its MQ-4C Triton drone program, with the per-unit cost rising from an initial estimate of over 30milliontomorethan30 million to more than 133 million, and projections suggesting it could reach 618millionperunitbytheprogram′send[4][5][6]−TheU.S.NavyhasdrasticallyreduceditsordersforTritons,withthelastorderplacednearly18monthsago,indicatingashiftindefenseprocurementprioritiestowardscheaperandmoreexpendabledronesystems[2][3][8]−ThecompanyisexpectedtowinddownTritonproductionbyOctober2028,withtheprogram′sfutureappearingbleakasthemarketshiftsawayfromcomplexsystemslikeTriton[8][10]CompanyPerformance−NorthropGrumman′sstockperformanceisunderscrutinyduetodisappointingfreecashflowrelativetoreportedearningsandalowlong−termearningsgrowthrateof3618 million per unit by the program's end [4][5][6] - The U.S. Navy has drastically reduced its orders for Tritons, with the last order placed nearly 18 months ago, indicating a shift in defense procurement priorities towards cheaper and more expendable drone systems [2][3][8] - The company is expected to wind down Triton production by October 2028, with the program's future appearing bleak as the market shifts away from complex systems like Triton [8][10] Company Performance - Northrop Grumman's stock performance is under scrutiny due to disappointing free cash flow relative to reported earnings and a low long-term earnings growth rate of 3% [10] - Despite challenges in the drone segment, Northrop has other projects, including the B-21 stealth bomber and a 3.5 billion contract for E-130J Doomsday Planes, indicating diversification in its defense portfolio [9]