On May 15, 2013, the shares of
L-3 Communications Holdings Inc.
) climbed to its 52-week high of $85.29 primarily driven by
strong results in the first quarter of 2013 on strong
international and commercial operations. We believe that
operational efficiency, few strategic acquisitions, innumerable
sizeable contracts and an effective cash deployment strategy have
also led the company's share to attain this high.
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L-3 Communications continues to follow an effective cash
deployment strategy. In Feb 2013, the board of directors
authorized to repurchase up to an additional $1.5 billion of the
company's common stock through Jun 30, 2015. During first-quarter
2013, the company repurchased $122 million of its common stock.
Apart from share buybacks, L-3 Communications paid $52 million
through dividends during the first quarter.
Going forward, we expect the incremental dividend and expanded
share buybacks to make the stock more attractive for the
investors. Moreover, the acquisitions of Kollmorgen
Electro-Optical business and Thales Group will enhance L-3
Communications' market position while expanding its commercial
L-3 Communications provides a broad range of products and
services used in a number of aerospace and defense platforms. The
company's Price to Book and Price to Sales multiples are lower
than the peer group average, which implies that the stock is
trading at a discount. It is making the shares of this company
L-3 Communications' full-year 2013 earnings guidance ranges from
$8.15 to $8.35 per share, up from the year-ago figure of $8.01
per share. The Zacks Consensus Estimate for full-year 2013 is
$8.17 per share, up 2.03% year over year. We expect the company's
long-term earnings growth to be 0.88%.
L-3 Communications currently has a Zacks Rank #3 (Hold). Apart
from L-3 Communications, other stocks in the sector that are
worth considering include
Erickson Air-Crane Incorporated
) with a Zacks Rank #1 (Strong Buy), and
Wesco Aircraft Holdings, Inc.
Alliant Techsystems Inc.
) with a Zacks Rank #2 (Buy).