L-3 Communications

L-3 Communications Holdings, Inc. (LLL - Analyst Report) has seen its shares rebound from recent lows. Strong second-quarter results should spur further growth. In late July, the company posted second-quarter earnings of $1.67 per share, eclipsing the year-prior $1.49 and beating Wall Street expectations by 2.45%.

Company Description

L-3 Communications supplies a broad range of products and services used in a substantial number of aerospace and defense platforms. The company is also a prime contractor in Command, Control and Communications, Intelligence, Surveillance and Reconnaissance (C³ISR), Government Services, Aircraft Modernization and Maintenance (AM&M) and has the broadest base of Specialized Products in the industry.

L-3 is also a major provider of homeland defense products and services for a variety of emerging markets.

The company’s customers include the U.S. Department of Defense (DoD) and its prime contractors, the U.S. Department of Homeland Security (DHS), U.S. Government intelligence agencies, major aerospace and defense contractors, allied foreign government ministries of defense, commercial customers and certain other U.S. federal, state and local government agencies.

Growth

The company announced second quarter results in late July. Earnings per share of $1.67, excluding items, topped the year-ago $1.49 and exceeded the consensus estimate by 2.45%. Net sales grew by 9% to $3.7 billion from last year’s $3.4 billion.

L-3 noted that it had record funded orders of $4.2 billion and ended June with record funded backlog of $11 billion.

Higher Estimates

Nine out of 10 covering analysts are calling for full-year 2008 earnings of $7.22 per share, up from last month’s $6.66. The most accurate estimate is a more bullish $7.32 per share.

Income

The company declared a quarterly dividend of 30 cents per share in early July. The dividend is payable on September 15 to shareholders of record at the close of business on August 18.

L-3 offers a dividend yield of 1.2%, well above the industry average, which is at a mere 0.1%.

The company stated in its second-quarter report that it had record free cash flow of $502 million in the 2008 second quarter, and continued to deploy the company's cash flow to increase shareholder value with share repurchases of $217 million, dividends of $37 million, and business acquisitions of $175 million.

Read the full analyst report on LLL