Harris Corp. Earnings Cheat Sheet: Margins Suffer as Costs Rise, Profit Falls

S&P 500 (NYSE:SPY) component Harris Corporation (NYSE:HRS) reported its results for the first quarter. Harris Corporation is an international communications and information technology company serving commercial markets and government.

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Harris Earnings Cheat Sheet for the First Quarter

Results: Net income for Harris Corporation fell to $121.6 million ($1.01 per share) vs. $163.9 million ($1.27 per share) a year earlier. This is a decline of 25.8% from the year earlier quarter.

Revenue: Rose 3.9% to $1.46 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: HRS reported adjusted net income of $1.06 per share. By that measure, the company was about in line with expectations as the mean analyst estimate was $1.05 per share. Analysts were expecting revenue of $1.46 billion.

Quoting Management: “Harris began fiscal 2012 with significantly higher orders, showing both strong year-over-year and sequential growth,” said Howard L. Lance, chairman, president and chief executive officer. “Orders in the first quarter also exceeded revenue, resulting in a greater than one book-to-bill for the company. RF Communications won several key U.S. and international pursuits, driving a book-to-bill of greater than one in Tactical Communications and further solidifying Harris as the world leader in tactical wideband networking.”

Key Stats:

The company has now topped analyst estimates for the last four quarters. It beat the mark by one cent in the fourth quarter of the last fiscal year, by one cent in the third quarter of the last fiscal year, and by 4 cents in the second quarter of the last fiscal year.

Gross margin shrank 3.5 percentage points to 33.8%. The contraction appeared to be driven by increased costs, which rose 9.7% from the year earlier quarter while revenue rose 3.9%.

Revenue has risen the past four quarters. Revenue increased 14.5% to $1.67 billion in the fourth quarter of the last fiscal year. The figure rose 6.3% in the third quarter of the last fiscal year from the year earlier and climbed 18.1% in the second quarter of the last fiscal year from the year-ago quarter.

The company has now seen net income fall in each of the last three quarters. In the fourth quarter of the last fiscal year, net income fell 11.8% from the year earlier, while the figure fell 16.1% in the third quarter of the last fiscal year.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the second quarter has moved down from $1.22 a share to $1.16 over the last ninety days. For the fiscal year, the average estimate has moved down from $5.12 a share to $5.07 over the last sixty days.

Competitors to Watch: ViaSat, Inc. (NASDAQ:VSAT), EMS Technologies, Inc. (NASDAQ:ELMG), Motorola Solutions Inc (NYSE:MSI), Comtech Telecomm. Corp. (NASDAQ:CMTL), ITT Corporation (NYSE:ITT), Globecomm Systems, Inc. (NASDAQ:GCOM), SeaChange International (NASDAQ:SEAC), Avid Technology, Inc. (NASDAQ:AVID), Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC), and Technicolor S.A. (NYSE:TCH).

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(Source: Xignite Financials)