L-3 Communications Third Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component L-3 Communications (NYSE:LLL) will unveil its latest earnings on Tuesday, October 30, 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 profit of $1.86 per share, a decline of 17% 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 $1.99. Between one and three months ago, the average estimate moved down. It has been unchanged at $1.86 during the last month. For the year, analysts are projecting net income of $7.84 per share, a decline of 11.4% from last year.

Past Earnings Performance: The company has beaten estimates the last four quarters and is coming off a quarter where it topped forecasts by 20 cents, reporting profit of $2.13 per share against a mean estimate of net income of $1.93 per share.

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A Look Back: In the second quarter, profit fell 15.6% to $205 million ($2.08 a share) from $243 million ($2.26 a share) the year earlier, but exceeded analyst expectations. Revenue fell 5.5% to $3.56 billion from $3.77 billion.

Wall St. Revenue Expectations: Analysts are projecting a decline of 14.2% in revenue from the year-earlier quarter to $3.25 billion.

Stock Price Performance: Between August 28, 2012 and October 24, 2012, the stock price had risen $3.62 (5.2%), from $69.48 to $73.10. The stock price saw one of its best stretches over the last year between September 4, 2012 and September 14, 2012, when shares rose for nine straight days, increasing 5.8% (+$4.04) 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.

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 1.3% in the third quarter of the last fiscal year, 5.6% in fourth quarter of the last fiscal year and 0.4% in the first quarter and then fell again in the second quarter.

The company is trying to use this earnings announcement to rebound from income declines in the past two quarters. Net income dropped 1.5% in the first quarter and then again in the second quarter.

Analyst Ratings: There are mostly holds on the stock with 10 of 12 analysts surveyed giving that rating.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.94 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.

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

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