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L3Harris (LHX) Down 6.3% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for L3Harris (LHX - Free Report) . Shares have lost about 6.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is L3Harris due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
L3Harris Q2 Earnings Beat Estimates, Sales Up Y/Y
L3Harris Technologies second-quarter 2023 adjusted earnings from continuing operations came in at $2.97 per share, which beat the Zacks Consensus Estimate of $2.94 by 1%. However, the bottom line decreased 8% from the year-ago quarter’s reported figure.
Excluding one-time items, the company reported GAAP earnings of $1.83 per share compared with $2.42 in the prior-year period.
Total Revenues
L3Harris’ revenues came in at $4,693 million, which beat the Zacks Consensus Estimate of $4,365 million by 7.5%. Revenues also rose 13.5% from the year-ago quarter’s $4,135 million.
Segmental Performance
Integrated Mission Systems: Net revenues in the segment came in at $1,735 million, up 7.9% year over year. This was driven by higher revenues from Intelligence, Surveillance and Reconnaissance, increased revenues from power and energy solutions and classified programs, and higher volumes from the Electro Optical and Commercial Aviation business.
The adjusted operating income totaled $174 million, down 15.9% from the prior-year quarter. The adjusted operating margin was 10%.
Space and Airborne Systems: The segment recorded net revenues of $1,715 million, up 9.5% year over year. This upside was largely driven by the ramp-up in new programs and higher revenues from mission networks.
The adjusted operating income decreased 15.9% to $174 million. The adjusted operating margin was 10%.
Communication Systems: Net revenues in the segment increased 21.5% to $1,206 million due to higher volumes from Tactical Communication, legacy platforms and Public Safety and higher revenues from Broadband Communications.
The operating income increased 36.6% to $325 million from that reported in the year-ago quarter. The operating margin was 25.2%.
Financial Position
As of Jun 30, 2023, L3Harris had $366 million in cash and cash equivalents compared with $880 million as of Dec 31, 2022.
The long-term debt as of Jun 30, 2023 was $7,867 million compared with $6,225 million as of Dec 31, 2022.
The net cash inflow from operating activities amounted to $414 million during the six months ended Jun 30, 2023 compared with $749 million in the year-ago period.
2023 View
L3Harris updated its 2023 outlook. It now expects to generate revenues in the range of $18.00-$18.30 billion, up from the prior range of $17.40-$17.80 billion. The Zacks Consensus Estimate for revenues is pegged at $17.86 billion, lower than the midpoint of the guided figure.
The company now projects 2023 earnings in the range of $12.15-$12.55 per share, revised up from the prior guidance range of $12.00-$12.50 per share. The Zacks Consensus Estimate for the same is pegged at $12.31 per share, higher than the midpoint of the guided range.
LHX continues to expect to generate more than $2 billion in adjusted free cash flow.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, L3Harris has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, L3Harris has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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L3Harris (LHX) Down 6.3% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for L3Harris (LHX - Free Report) . Shares have lost about 6.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is L3Harris due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
L3Harris Q2 Earnings Beat Estimates, Sales Up Y/Y
L3Harris Technologies second-quarter 2023 adjusted earnings from continuing operations came in at $2.97 per share, which beat the Zacks Consensus Estimate of $2.94 by 1%. However, the bottom line decreased 8% from the year-ago quarter’s reported figure.
Excluding one-time items, the company reported GAAP earnings of $1.83 per share compared with $2.42 in the prior-year period.
Total Revenues
L3Harris’ revenues came in at $4,693 million, which beat the Zacks Consensus Estimate of $4,365 million by 7.5%. Revenues also rose 13.5% from the year-ago quarter’s $4,135 million.
Segmental Performance
Integrated Mission Systems: Net revenues in the segment came in at $1,735 million, up 7.9% year over year. This was driven by higher revenues from Intelligence, Surveillance and Reconnaissance, increased revenues from power and energy solutions and classified programs, and higher volumes from the Electro Optical and Commercial Aviation business.
The adjusted operating income totaled $174 million, down 15.9% from the prior-year quarter. The adjusted operating margin was 10%.
Space and Airborne Systems: The segment recorded net revenues of $1,715 million, up 9.5% year over year. This upside was largely driven by the ramp-up in new programs and higher revenues from mission networks.
The adjusted operating income decreased 15.9% to $174 million. The adjusted operating margin was 10%.
Communication Systems: Net revenues in the segment increased 21.5% to $1,206 million due to higher volumes from Tactical Communication, legacy platforms and Public Safety and higher revenues from Broadband Communications.
The operating income increased 36.6% to $325 million from that reported in the year-ago quarter. The operating margin was 25.2%.
Financial Position
As of Jun 30, 2023, L3Harris had $366 million in cash and cash equivalents compared with $880 million as of Dec 31, 2022.
The long-term debt as of Jun 30, 2023 was $7,867 million compared with $6,225 million as of Dec 31, 2022.
The net cash inflow from operating activities amounted to $414 million during the six months ended Jun 30, 2023 compared with $749 million in the year-ago period.
2023 View
L3Harris updated its 2023 outlook. It now expects to generate revenues in the range of $18.00-$18.30 billion, up from the prior range of $17.40-$17.80 billion. The Zacks Consensus Estimate for revenues is pegged at $17.86 billion, lower than the midpoint of the guided figure.
The company now projects 2023 earnings in the range of $12.15-$12.55 per share, revised up from the prior guidance range of $12.00-$12.50 per share. The Zacks Consensus Estimate for the same is pegged at $12.31 per share, higher than the midpoint of the guided range.
LHX continues to expect to generate more than $2 billion in adjusted free cash flow.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, L3Harris has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, L3Harris has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.