Markets

L3 Technologies (LLL) Tops Q4 Earnings, Lifts 2017 View

Defense contractor L3 Technologies, Inc.LLL posted fourth-quarter 2016 adjusted earnings of $2.38 per share, beating the Zacks Consensus Estimate of $2.12 by 12.3%. Earnings also improved 10.2% from the year-ago figure of $2.16.

For full-year 2016, the company reported adjusted earnings of $8.21 per share, beating the Zacks Consensus Estimate of $7.95 by 3.3%.

Total Revenue

Total revenue of $2.99 billion in the quarter surpassed the Zacks Consensus Estimate of $2.77 billion by 7.9%. Revenues were also up 4.1% year over year.

Organic sales to the U.S. government increased 5%, while that to international and commercial customers were down 0.8%. Overall, organic sales increased 3% in the fourth quarter.

Total revenue of $10.51 billion in the quarter surpassed the Zacks Consensus Estimate of $10.30 billion by 2%.

Orders & Margin

Funded orders in the reported quarter were $3.58 billion, reflecting a 39.7% year-over-year increase. For full-year 2016, the company's funded orders came in at $11 billion, reflecting an 11.5% increase from the year-ago figure. Funded backlog was $8.9 billion as of Dec 31, 2016, up 5.6% from $8.4 billion as of Dec 31, 2015.

Operating margin expanded 80 basis points (bps) to 12.3% in 2016.

L-3 Communications Holdings, Inc. Price, Consensus and EPS Surprise

L-3 Communications Holdings, Inc. Price, Consensus and EPS Surprise | L-3 Communications Holdings, Inc. Quote

Segmental Performance

Aerospace Systems : Net sales at the segment increased 0.6% to $1,075 million from the prior-year figure of $1,069 million mainly on account of higher sales of Vertex Aerospace and ISR Systems.

Operating income was $57 million, compared to the year-ago number of $61 million, while operating margin contracted 40 bps to 5.3%.

Communication Systems : The segment recorded net sales of $582 million in the reported quarter, down 0.5%. The decrease mainly reflects reduced demand for power devices for commercial satellites.

Operating income improved 1.8% to $58 million, while operating margin expanded 30 bps to 10%.

Electronic Systems : Net sales at the segment improved 9.4% to $1,332 million, primarily due to significant organic sales growth.

Operating income improved 30.7% to $179 million, while operating margin expanded 210 bps to 13.4%.

Financial Position

As of Dec 31, 2016, L3 Technologies had $363 million in cash and cash equivalents, compared with $207 million as of Dec 31, 2015.

Long-term debt as of Dec 31, 2016 was $3,320 million, compared with $3,125 million as of Dec 31, 2015.

Net cash from operating activities was $1, 097 million at the end of 2016, up 2.6% from the year-ago figure. Capital expenditure totaled $216 million, compared with $197 million in the prior year.

2017 Guidance

L3 Technologies has raised its 2017 outlook. The company now expects earnings in the range of $8.40−$8.60 per share (versus the prior range of $8.15−$8.35) with revenues of $10,625 −$10,825 million (versus the prior range of $10,475−$10,675 billion) for 2017.

Moreover, the company expects to generate cash from operations of $1,085 million, up from the prior guidance of $1, 075 million. However, the outlook for resultant free cash flow remains at $865 million, on account of higher capital expenditure.

Peer Earnings Review

Rockwell Collins Inc. COL reported financial results for first-quarter fiscal 2017 ended Dec 31, 2016. The company's adjusted earnings per share of $1.20 surpassed the Zacks Consensus Estimate of $1.15 by 4.3%.

Lockheed Martin Corp. LMT reported fourth-quarter 2016 earnings from continuing operations of $3.25 per share, surpassing the Zacks Consensus Estimate of $3.04 by 6.9%. Earnings also increased 23.6% from the year-ago level, courtesy of strong revenue and operating margin growth.

Textron Inc. TXT reported fourth-quarter 2016 adjusted earnings from continuing operations of 80 cents per share, missing the Zacks Consensus Estimate of 87 cents by 8%.

Zacks Rank

L3 Technologies currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Zacks' Best Private Investment Ideas

In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?

Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Lockheed Martin Corporation (LMT): Free Stock Analysis Report

Rockwell Collins, Inc. (COL): Free Stock Analysis Report

Textron Inc. (TXT): Free Stock Analysis Report

L-3 Communications Holdings, Inc. (LLL): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

LMT TXT

Other Topics

Earnings Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More