Northrop Grumman Narrows Focus Amid Defense Market Uncertainty

Defense contractors typically fight tooth-and-nail for every potential contract, knowing that large, needle-moving program wins are hard to come by. That's why Northrop Grumman's (NYSE: NOC) decisions in recent months to back out of bidding for multiple awards that it was once considered among the favorites to win raised a lot of eyebrows in the industry. The company's reasoning for the moves should give investors throughout the industry pause.

A Northrop Grumman B-2 Spirit bomber in flight. Image source: Northrop Grumman.

Northrop in mid-October said it would not bid for the U.S. Navy's $2.16 billion MQ-25 Stingray tanker drone competition, and in September walked away from a competition to design and build a new U.S. Air Force training plane. Both were programs where Northrop seemed well-suited to compete. The company was deeply involved in a demonstrator program that laid the foundation for the MQ-25 program, and the Air Force has flown Northrop trainers since the early 1960s.

Source: Fool.com