Northrop Wins Deal to Produce High Explosive Proximity for US Army

Northrop Grumman Corp. NOC recently secured a contract worth more than $200 million to manufacture the XM1211 High Explosive Proximity-fuzed round of medium caliber ammunition. The award marks an important step forward in advancing next-generation munitions designed to strengthen short-range air defense capabilities, particularly against small unmanned aerial systems (UAS).

The company will carry out production across several of its key sites, including Plymouth and Elk River in Minnesota, the Allegany Ballistics Laboratory in West Virginia and the Radford Ammunition Plant in Virginia.

Northrop Leads in Advanced Ammunition

Northrop Grumman has continuously driven innovation in ammunition, delivering technologies that strengthen modern defense systems. The company is responding to evolving battlefield threats by developing new forms of advanced medium-caliber ammunition, such as airburst, proximity, and guided munitions designed to enhance precision, counter unmanned systems and penetrate advanced armor.

Developed in collaboration with the U.S. Army Joint Program Executive Office for Armaments & Ammunition, Project Manager Maneuver Ammunition Systems, and the U.S. Army Combat Capabilities Development Command, the XM1211 round is optimized for engaging small UAS and is intended for use with Northrop Grumman’s XM914 and M230LF Bushmaster Chain Guns.

The XM1211 is a 30×113mm round equipped with a proximity sensor that triggers detonation once it nears a target, dispersing fragmentation to ensure an effective kill.

Expanding Opportunities for NOC and Other Defense Stocks

As regional conflicts escalate and armed forces invest in more advanced combat platforms, global demand for ammunition is growing, cementing its role as a critical resource for operational effectiveness.

This is likely to have prompted the Mordor Intelligence firm to forecast a compound annual growth rate of 3.99% for the ammunition market during 2025-2030. These favorable growth trends are poised to support Northrop, a long-standing leader in advanced ammunition development.

Other defense companies that are likely to benefit from the ammunition market are discussed below:

BAE Systems plc BAESY: The company serves as a principal supplier of medium-calibre ammunition to the UK Ministry of Defence and several other NATO partners. Its 40mm cased telescoped rounds deliver high effectiveness against reinforced structures, dismounted personnel and lightly armored vehicles.

BAESY boasts a long-term (three to five years) earnings growth rate of 14.45%. The Zacks Consensus Estimate for 2025 sales stands at $40.68 billion, which calls for an increase of 62.9%.

General Dynamics Corp. GD: The company’s General Dynamics Ordnance and Tactical Systems unit manufactures high-quality, high-performance medium-caliber ammunition ranging from 20mm to 40mm for a wide array of land, sea and air platforms. Its products are built on decades of innovation, design expertise and deep manufacturing experience.

GD boasts a long-term earnings growth rate of 12.81%. The Zacks Consensus Estimate for 2025 sales stands at $51.97 billion, which suggests a jump of 8.9%.

NOC Stock Price Movement

In the past six months, Northrop shares have risen 13.2% compared with the industry’s growth of 6.4%.

NOC’s Zacks Rank & A Key Pick

Northrop currently carries a Zacks Rank #3 (Hold). A better-ranked stock from the same industry is Virgin Galactic SPCE, which has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for 2025 sales stands at $1.51 million. The company delivered an average earnings surprise of 20.37% in the last four quarters.

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This article originally published on Zacks Investment Research (zacks.com).

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