Harris Corporation (HRS - Free Report) reported solid fourth-quarter fiscal 2018 results, wherein both the top line and the bottom line surpassed the respective Zacks Consensus Estimate.
GAAP earnings from continuing operations increased to $1.74 per share from $1.35 in the year-ago quarter on top-line growth and tax benefit. For fiscal 2018, GAAP earnings per share from continuing operations increased 16% year over year to $5.94.
Fiscal fourth-quarter non-GAAP earnings from continuing operations were $1.78 per share compared with $1.49 in the year-earlier quarter, beating the Zacks Consensus Estimate of $1.76.
Harris Corporation Price, Consensus and EPS Surprise
Revenues for the reported quarter increased 8% year over year to $1,666 million, driven by growth in Communication Systems and Electronic Systems. The top line surpassed the Zacks Consensus Estimate of $1,618 million. Fiscal 2018 revenues increased 5% to $6,182 million.
Total operating income for the quarter was $322 million compared with $275 million in the year-ago quarter. Operating margin was 19.3% compared with 17.8% in the prior-year period.
Revenues from Communication Systems segment came in at $523 million for the quarter, up 16% year over year, owing to growth in Tactical Communications and Night Vision. Operating income grew 11% to $162 million due to increased volume and operational efficiencies.
Revenues from Electronic Systems unit were $640 million, up 8% year over year, driven by growth in Avionics on increased F-35 production, in Electronic Warfare from F-16 and F/A-18 platforms and in C4ISR from the ramp up of the U.K. robotics and UAE battle management programs.
Operating income for the segment was $119 million, up 14% year over year due to higher volume and productivity.
Revenues from Space and Intelligence Systems unit remained flat year over year at $508 million, owing to growth in Classified programs, driven by the ramp of small satellites, ground-based processing adjacency and space surveillance programs, somewhat offset by lower sales in environmental projects. Operating income increased 8% to $86 million due to strong program execution and incremental pension income.
Cash Flow and Balance Sheet
The company generated $751 million as cash from operating activities in fiscal 2018 compared with $569 million a year ago.
In fiscal 2018, the company generated adjusted free cash flow of $915 million compared with $850 million in the previous-year period.
At the end of fiscal 2018, the company had cash and cash equivalents of $288 million with net long-term debt of $3,408 million compared with respective tallies of $484 million and $3,396 million in the prior-year period.
Harris returned $544 million to shareholders through dividends and share repurchases in fiscal 2018.
Harris provided guidance for fiscal 2019. The company expects revenues in the range of $6.53-$6.65 billion, up 6-8% from fiscal 2018. EPS from continuing operations in expected between $7.65 and $7.85. While free cash flow is projected to be more than $1 billion, tax rate is assumed to be around 17%.
Zacks Rank & Stocks to Consider
Harris currently has a Zacks Rank #4 (Sell). Better-ranked stocks in the industry include Comtech Telecommunications Corp. (CMTL - Free Report) , Juniper Networks, Inc. (JNPR - Free Report) and Motorola Solutions, Inc. (MSI - Free Report) . While Comtech sports a Zacks Rank #1 (Strong Buy), Juniper and Motorola carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Comtech has an expected long-term earnings growth rate of 5%. It exceeded earnings estimates in each of the trailing four quarters, with an average of 123.7%.
Juniper has an expected long-term earnings growth rate of 5.7%. It exceeded earnings estimates thrice in the trailing four quarters, with an average positive surprise of 4.9%.
Motorola has an expected long-term earnings growth rate of 8.5%. It exceeded earnings estimates in each of the trailing four quarters, with an average of 12.1%.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>