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L3Harris (LHX) to Report Q3 Earnings: What's in the Cards?

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L3Harris Technologies, Inc. (LHX - Free Report) is scheduled to release third-quarter 2020 results on Oct 30, before the opening bell.

The company delivered earnings surprise of 8.02% in the last reported quarter.

Moreover, the company’s four-quarter average earnings surprise was 6.72%.

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

Factors at Play

During the third quarter, the company launched a technology solution, RASIS (Rapid, Adaptable, Smart, Intelligence, Surveillance and Reconnaissance), which is the new universal signals intelligence (SIGINT) pod. This will enhance ISR capability to aircraft previously only available through major airplane modifications. Moreover, the company completed delivery of its 5,000th WESCAM MX-Series imaging system since its launch in 1997. We believe positive synergies from such innovation and notable deliveries to have contributed to the company’s top line.

L3Harris Technologies Inc Price and EPS Surprise

L3Harris Technologies Inc Price and EPS Surprise

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

Further, revenues recognized from earlier defense contracts are also likely to have contributed to the company’s top line in the soon-to-be-reported quarter.   
However, the impact of the ongoing pandemic on commercial aerospace business might have weighed on its commercial aviation unit’s performance, thereby affecting overall revenues.

The Zacks Conensus Estimate for L3Harris’ third-quarter revenues is pegged at $4.50 billion, indicating an increase of 1.5% from the year-ago quarter’s reported figure.

The impacts of COVID-19 failed to slow down the integration procedure of L3 Technologies and Harris Corp. In fact, the company now expects to exceed its savings target by 2020-end. This in turn can be expected to have benefitted the company’s bottom line in the third quarter. Moreover, we believe L3Harris’ costs management initiatives and operational efficiencies must have boosted its margin, thereby boosting its quarterly earnings.

The Zacks Consensus Estimate for L3Harris’ third-quarter earnings of $2.72 per share indicates growth of 5.4% from the year-ago quarter reported figure.
In July 2020, the company completed the previously announced sale of its EOTech business to American Holoptics, an affiliate of Koucar Management. We expect its balance sheet in the upcoming results to duly reflect sale proceeds from this transaction.

What the Zacks Model Says

Our proven model predicts 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 see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

L3Harris has an Earnings ESP of +0.57% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Recent Defense Releases

Lockheed Martin (LMT - Free Report) reported third-quarter 2020 earnings from continuing operations of $6.25 per share, which surpassed the Zacks Consensus Estimate of $6.07 by 3%.

Hexcel (HXL - Free Report) reported third-quarter 2020 loss of 29 cents per share against the Zacks Consensus Estimate of earnings of 7 cents. The bottom line also declined from the prior-year quarter’s earnings per share of 90 cents.

Teledyne (TDY - Free Report) reported third-quarter 2020 adjusted earnings of $2.48 per share, which surpassed the Zacks Consensus Estimate of $2.40 by 3.3%.

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