L-3 Communications Holdings Misses on Revenues but Beats on EPS

Seth Jayson, The Motley Fool

L-3 Communications Holdings (NYS: LLL) reported earnings on Jan. 31. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), L-3 Communications Holdings missed estimates on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue shrank, and GAAP earnings per share dropped.

Gross margins dropped, operating margins improved, net margins grew.

Revenue details
L-3 Communications Holdings booked revenue of $4.02 billion. The 14 analysts polled by S&P Capital IQ hoped for revenue of $4.18 billion. Sales were 5.6% lower than the prior-year quarter's $4.26 billion.


Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $2.49. The 15 earnings estimates compiled by S&P Capital IQ averaged $2.41 per share on the same basis. GAAP EPS of $2.72 for Q4 were 15% higher than the prior-year quarter's $2.36 per share.


Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 11.0%, 400 basis points worse than the prior-year quarter. Operating margin was 11.0%, 20 basis points better than the prior-year quarter. Net margin was 6.8%, 50 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $3.48 billion. On the bottom line, the average EPS estimate is $1.90.

Next year's average estimate for revenue is $14.51 billion. The average EPS estimate is $8.45.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 904 members out of 941 rating the stock outperform, and 38 members rating it underperform. Among 256 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 246 give L-3 Communications Holdings a green thumbs-up, and 10 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on L-3 Communications Holdings is hold, with an average price target of $72.17.

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At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool owns shares of L-3 Communications Holdings. Motley Fool newsletter services have recommended buying shares of L-3 Communications Holdings. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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