L-3 Communications Second Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component L-3 Communications (NYSE:LLL) will unveil its latest earnings on Thursday, July 26, 2012. L-3 Communications is a system contractor in aircraft modernization and maintenance, serving customers in commercial telecommunications and government.

L-3 Communications Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for net income of $2.03 per share, a decline of 5.6% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved down from $2.08. Between one and three months ago, the average estimate moved down. It also has dropped from $2.06 during the last month. Analysts are projecting profit to rise by 4.1% versus last year to $8.49.

Past Earnings Performance: The company has beaten estimates the last four quarters and is coming off a quarter where it topped forecasts by 13 cents, reporting profit of $2.01 per share against a mean estimate of net income of $1.88 per share.

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Wall St. Revenue Expectations: On average, analysts predict $3.2 billion in revenue this quarter, a decline of 15.1% from the year-ago quarter. Analysts are forecasting total revenue of $13.05 billion for the year, a decline of 14% from last year’s revenue of $15.17 billion.

Stock Price Performance: Between May 23, 2012 and July 20, 2012, the stock price had risen $2.66 (3.9%), from $67.98 to $70.64. The stock price saw one of its best stretches over the last year between March 6, 2012 and March 16, 2012, when shares rose for nine straight days, increasing 4.9% (+$3.30) over that span. It saw one of its worst periods between November 11, 2011 and November 23, 2011 when shares fell for nine straight days, dropping 10.1% (-$7.03) over that span.

Analyst Ratings: There are mostly holds on the stock with 10 of 13 analysts surveyed giving that rating.

Key Stats:

On the top line, the company is hoping to use this earnings announcement to snap a string of four-straight quarters of revenue decreases. Revenue fell 5% in the second quarter of the last fiscal year, 1.3% in third quarter of the last fiscal year and 5.6% in the fourth quarter of the last fiscal year and then fell again in the first quarter.

The company is hoping to rebound with this earnings release after a net income drop last quarter. Net income rose 2.2% in the fourth quarter of the last fiscal year before dropping in the first quarter.

A Look Back: In the first quarter, profit fell 1.5% to $201 million ($2.01 a share) from $204 million ($1.85 a share) the year earlier, but exceeded analyst expectations. Revenue fell 0.4% to $3.59 billion from $3.6 billion.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.89 last quarter. The current ratio is an indication of a firm’s liquidity and ability to meet creditor demands and generally, for every dollar the company owes in the short term, it has that figure available in assets that can be converted to cash in the short term. The company regressed in this liquidity measure from 1.95 in the fourth quarter of the last fiscal year to the last quarter driven in part by an increase in liabilities. Current liabilities increased 2.9% to $2.77 billion while assets decreased 0.1% to $5.24 billion.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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