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Will Higher Interest Costs Hurt L3Harris (LHX) in Q2 Earnings?
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L3Harris Technologies, Inc. (LHX - Free Report) is slated to report second-quarter 2023 results on Jul 26, after market close.
L3Harris has a four-quarter negative earnings surprise of 0.37%, on average. The strong revenue performance across most of its business segments is likely to have contributed to its overall second-quarter revenues. However, increased interest expenses might have dented the bottom line.
Integrated Mission Systems to Post Dismal Performance
Lower classified and service revenues from maritime business are expected to have hurt Integrated Mission Systems (IMS) segment’s revenues in the second quarter of 2023, thereby outweighing higher sales volumes anticipated from Electro Optical and Commercial Aviation businesses.
The Zacks Consensus Estimate for IMS’ second-quarter revenues is pegged at $1,630.3 million, indicating a decline of 2.6% from the year-ago quarter’s reported figure.
Higher revenues from Space Systems and an increase in production from Mission Avionics business are likely to have added impetus to this unit’s revenues in the second quarter.
The Zacks Consensus Estimate for Space and Airborne Systems’ revenues is pegged at $1,585.4 million, indicating an improvement of 5.8% from the year-ago quarter’s reported number.
Higher revenues from Broadband Communications, principally driven by the TDL acquisition, as well as higher volume from Tactical Communications are expected to have boosted Communication Systems’ top-line performance.
The Zacks Consensus Estimate for this unit’s revenues is pinned at $1,129.1 million, implying growth of 13.7% from the prior-year quarter’s reported figure.
Second-Quarter Estimates
With the Space and Airborne Systems and the Communication Systems accounting for almost 76% of LHX’s total revenues, solid top-line performance from these segments might have outweighed the sales decline of the IMS unit. This, in turn, is likely to have boosted the company’s overall revenues in the quarter to be reported.
Solid sales growth expectation must have benefited the company’s bottom line. However, inflation-induced higher input costs and inflated interest expenses caused by increased interest rates might have had an adverse impact on LHX’s bottom line.
The Zacks Consensus Estimate for LHX’s second-quarter sales is pegged at $4.34 billion, indicating growth of 4.9% from the prior-year quarter’s reported figure.
The consensus estimate for second-quarter earnings is pinned at $2.91 per share, implying a year-over-year decrease of 9.9%.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for L3Harris Technologies this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
L3Harris Technologies has an Earnings ESP of +1.67% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Below are three other defense stocks that have the right combination of elements to post an earnings beat this reporting cycle.
Huntington Ingalls delivered a four-quarter average earnings surprise of 8.09%. The consensus estimate for its earnings is pegged at $3.14 per share, while that for sales is pinned at $2.73 billion.
TransDigm Group (TDG - Free Report) is scheduled to release fiscal third-quarter 2023 results soon. TDG has an Earnings ESP of +1.53% and a Zacks Rank #2.
TransDigm delivered a four-quarter average earnings surprise of 8.97%. The Zacks Consensus Estimate for TDG’s earnings is pegged at $6.33 per share, while that for sales is pinned at $1.68 billion.
Embraer SA (ERJ - Free Report) is expected to report second-quarter results on Aug 14. ERJ has an Earnings ESP of +25% and a Zacks Rank #3.
Embraer delivered a four-quarter average negative earnings surprise of 253.33%. The consensus mark for ERJ’s earnings is pegged at 12 cents per share, while that for sales is pinned at $1.16 billion.
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Will Higher Interest Costs Hurt L3Harris (LHX) in Q2 Earnings?
L3Harris Technologies, Inc. (LHX - Free Report) is slated to report second-quarter 2023 results on Jul 26, after market close.
L3Harris has a four-quarter negative earnings surprise of 0.37%, on average. The strong revenue performance across most of its business segments is likely to have contributed to its overall second-quarter revenues. However, increased interest expenses might have dented the bottom line.
Integrated Mission Systems to Post Dismal Performance
Lower classified and service revenues from maritime business are expected to have hurt Integrated Mission Systems (IMS) segment’s revenues in the second quarter of 2023, thereby outweighing higher sales volumes anticipated from Electro Optical and Commercial Aviation businesses.
The Zacks Consensus Estimate for IMS’ second-quarter revenues is pegged at $1,630.3 million, indicating a decline of 2.6% from the year-ago quarter’s reported figure.
L3Harris Technologies Inc Price and EPS Surprise
L3Harris Technologies Inc price-eps-surprise | L3Harris Technologies Inc Quote
Other Units to Boost Revenues
Higher revenues from Space Systems and an increase in production from Mission Avionics business are likely to have added impetus to this unit’s revenues in the second quarter.
The Zacks Consensus Estimate for Space and Airborne Systems’ revenues is pegged at $1,585.4 million, indicating an improvement of 5.8% from the year-ago quarter’s reported number.
Higher revenues from Broadband Communications, principally driven by the TDL acquisition, as well as higher volume from Tactical Communications are expected to have boosted Communication Systems’ top-line performance.
The Zacks Consensus Estimate for this unit’s revenues is pinned at $1,129.1 million, implying growth of 13.7% from the prior-year quarter’s reported figure.
Second-Quarter Estimates
With the Space and Airborne Systems and the Communication Systems accounting for almost 76% of LHX’s total revenues, solid top-line performance from these segments might have outweighed the sales decline of the IMS unit. This, in turn, is likely to have boosted the company’s overall revenues in the quarter to be reported.
Solid sales growth expectation must have benefited the company’s bottom line. However, inflation-induced higher input costs and inflated interest expenses caused by increased interest rates might have had an adverse impact on LHX’s bottom line.
The Zacks Consensus Estimate for LHX’s second-quarter sales is pegged at $4.34 billion, indicating growth of 4.9% from the prior-year quarter’s reported figure.
The consensus estimate for second-quarter earnings is pinned at $2.91 per share, implying a year-over-year decrease of 9.9%.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for L3Harris Technologies this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
L3Harris Technologies has an Earnings ESP of +1.67% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Below are three other defense stocks that have the right combination of elements to post an earnings beat this reporting cycle.
Huntington Ingalls Industries (HII - Free Report) is expected to release second-quarter results on Aug 3. HII has an Earnings ESP of +0.48% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Huntington Ingalls delivered a four-quarter average earnings surprise of 8.09%. The consensus estimate for its earnings is pegged at $3.14 per share, while that for sales is pinned at $2.73 billion.
TransDigm Group (TDG - Free Report) is scheduled to release fiscal third-quarter 2023 results soon. TDG has an Earnings ESP of +1.53% and a Zacks Rank #2.
TransDigm delivered a four-quarter average earnings surprise of 8.97%. The Zacks Consensus Estimate for TDG’s earnings is pegged at $6.33 per share, while that for sales is pinned at $1.68 billion.
Embraer SA (ERJ - Free Report) is expected to report second-quarter results on Aug 14. ERJ has an Earnings ESP of +25% and a Zacks Rank #3.
Embraer delivered a four-quarter average negative earnings surprise of 253.33%. The consensus mark for ERJ’s earnings is pegged at 12 cents per share, while that for sales is pinned at $1.16 billion.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.