L-3 Wins Contracts, Shares Fall - Analyst Blog
April 08 2014 - 6:50PM
Zacks
L-3 Communications Holdings Inc. (LLL) received
two contracts worth approximately $39.7 million from the U.S.
Department of Defense (DoD) on Friday, Apr 4, 2014. The deep and
diversified portfolio of its product offerings enables the company
to win defense contracts at regular intervals.
However, the share price edged down 1.2% on Monday, Apr 7, 2014
primarily due to slackness noticed in the overall trading index.
The majority of big names in the aerospace and defense industry
shed a part of their value in yesterday’s intraday trade.
The bigger of the two contracts, worth $24.7 million, was awarded
to L-3 Communications Aerospace LLC. Per the contract, the L-3 unit
will inspect, maintain and do repair work on different aircraft and
aircraft components through Oct 28, 2014. This work will be done at
the Corpus Christi Army Depot, Naval Air Station, Corpus Christi,
TX.
The second contract, worth $15.0 million, was received by L-3
Kollmorgen Electro-Optical (KEO). Per the contract, this L-3 unit
will work on the production of 16 universal modular masts (UMM).
UMM is a non-hull penetrating mast which is installed on
Virginia-class submarines. The program is scheduled to complete by
May 2016. 74% of the work will be completed in Bologna, Italy and
the remaining 26% will be done in Northampton, MA.
Apart from these contracts L-3 Communications had received another
big contract from the DoD in the first quarter of 2014. The
company’s Coleman Aerospace business received a contract worth $73
million from the U.S. Missile Defense Agency in Feb 2014. If both
the parties agree, the contract may be extended to more than $400
million over the next five years.
L-3 Communications, a Zacks Rank #2 (Buy) stock, has been posting
strong financial results, surpassing our estimates by 4.75% on an
average in the last 4 quarters. The strong performance was driven
by program execution capability, cost cutting initiatives as well
as contribution from its international and commercial
businesses.
L-3 Communications surpassed the Zacks Consensus Estimate in the
last reported quarter as well as full year 2013. For 2014, the
company’s earnings guidance is in the range of $8.15 to $8.35 per
share. The Zacks Consensus Estimate for 2014 earnings is above the
guidance range at $8.40 per share.
Besides L-3 Communications some of the other defense players to
look out for include Huntington Ingalls Industries,
Inc. (HII), General Dynamics Corp. (GD)
and Raytheon Co. (RTN). While Huntington Ingalls
holds a Zacks Rank #1 (Strong Buy), Raytheon and General Dynamics
carry a Zacks Rank #2 (Buy).
GENL DYNAMICS (GD): Free Stock Analysis Report
HUNTINGTON INGL (HII): Free Stock Analysis Report
L-3 COMM HLDGS (LLL): Free Stock Analysis Report
RAYTHEON CO (RTN): Free Stock Analysis Report
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