L-3 Communications

One of the recent contracts awarded to L-3 Communications (LLL - Analyst Report) was an $18 million contract by the U.K. Ministry of Defense (MoD), Royal Air Force. L-3 continues to outperform its peers in both the growth and income categories. The company’s ROE of 13% is above the industry average of 11%. Its dividend yield of 1.1% tops the industry average of 0.1%.

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.

Recent Contract Win

L-3 recently announced that its SPAR subsidiary has been awarded an $18 million contract by the U.K. Ministry of Defense (Mod), Royal Air Force to perform outer wing replacements on three C-130K aircraft.

"We are pleased that the MoD and Royal Air Force have entrusted us with this C-130 outer wing program," said Sylvain Bedard, president of L-3 SPAR. "We have developed innovative and unique wing improvement programs for the Canadian C-130 fleet for over 40 years, and this award is a reflection of our market leadership in C-130 life extension programs."

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

Analysts are calling for full-year 2008 earnings of $7.20 per share, up from the two months-ago level of $6.66.

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 1.1%, 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.