Stocks

Will Segmental Performance Boost L3Harris (LHX) Q3 Earnings?

L3Harris Technologies, Inc. LHX is scheduled to release third-quarter 2021 results on Oct 29, before the opening bell.

Solid segmental performance is likely to boost the company’s quarterly results. Moreover, the company’s four-quarter average earnings surprise is 4.61%.

Let’s take a detailed look at some of the factors that may have influenced the company’s performance in the third quarter.

Segmental Performance

Solid growth of the company’s missile defense and other responsive programs, along with growth in Intel & Cyber units, is expected to have boosted the top-line performance of L3Harris Technologies’ Space and Airborne Systems business segment in the third quarter.

The Zacks Consensus Estimate for Space and Airborne Systems unit’s third-quarter revenues, pegged at $1.33 billion, indicates an increase of 6.5% from the year-ago quarter’s reported figure.

L3Harris Technologies Inc Price and EPS Surprise

L3Harris Technologies Inc Price and EPS Surprise

L3Harris Technologies Inc price-eps-surprise | L3Harris Technologies Inc Quote

Consistent modernization demand for DoD tactical and integrated vision systems is expected to have once again boosted revenues of the company’s Communication Systems segment. However, lower volume from legacy unmanned platforms within broadband due to the transition from permissive to contested operating environments might have marred the quarterly growth of this segment.

The Zacks Consensus Estimate for Communication Systems unit’s third-quarter revenues, pegged at $1.15 billion, indicates a rise of 4.7% from the year-ago quarter’s reported figure.

A gradual recovery observed in the global air traffic might have had a favorable impact on the quarterly performance of the company’s Aviation Systems segment. Ramped-up production of key platforms, including the Virginia-class submarine and constellation class frigate, is expected to have boosted the revenue performance of its Integrated Mission Systems unit.

Overall, the Zacks Consensus Estimate for L3Harris’ third-quarter revenues, pegged at $4.51 billion, indicates a rise of 1.1% from the year-ago quarter’s reported figure.

Earnings Prospects

Solid revenue growth prospects keep our hopes high for the company’s Q3 earnings performance. The company has been witnessing significant cost synergies, primarily attributable to supply chain and facilities consolidation as a result of the merger between legacy L3 Technologies and Harris Corp.

This must have boosted L3Harris’ third-quarter operating margin, thereby contributing favorably to the bottom-line figure.

The Zacks Consensus Estimate for L3Harris’ third-quarter earnings of $3.16 per share indicates growth of 11.3% from the year-ago quarter’s reported figure.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for L3Harris this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

L3Harris has an Earnings ESP of -0.44% and a Zacks Rank #3.

Stocks to Consider

Here are a couple of defense companies you may want to consider, as these have the right combination of elements to post an earnings beat this season:

Transdigm Group TDG has an Earnings ESP of +0.36% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Huntington Ingalls HII has an Earnings ESP of +3.59% and a Zacks Rank #2. 

A Recent Defense Release

Raytheon Technologies Corporation’s RTX third-quarter 2021 adjusted earnings per share (EPS) of $1.26 outpaced the Zacks Consensus Estimate of $1.07 by 17.8%.

 


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

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