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L3 Technologies (LLL) to Report Q2 Earnings: What's in Store?

Zacks Equity Research
Updated

L3 Technologies, Inc. LLL is scheduled to release second-quarter 2018 results on Jul 26, before the opening bell.

In the last reported quarter, the company delivered a positive earnings surprise of 17.59%. Moreover, it surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average beat of 7.42%.

Let’s see how things are shaping up prior to this announcement.

Factors to Consider

Contract wins from Pentagon as well as foreign allies of the United States drive revenues for defense contractors like L3 Technologies. Unfortunately, the company was successful in securing only one notable contract worth $391 million throughout the second quarter of 2018. Such a dearth in orders is likely to weigh on the company’s revenues for the to-be-reported quarter.

Meanwhile, L3 Technologies' commercial SATCOM sales witnessed a modest decline in the first quarter due to continued soft market demand for new satellites. This trend is expected to continue in the near term as well, thereby hampering the company’s second quarter revenues.

Cumulatively, these factors are expected to drag down the company’s overall top line number. Evidently, the Zacks Consensus Estimate for revenues is pegged at $2.48 billion, implying a 9.2% year-over-year decline.

On the bottom line front, the company expects its operating margin to expand in the second quarter by approximately 180 basis points, which in turn should benefit its quarterly earnings. Moreover, lower tax rates are expected to consistently boost L3 Technologies’ earnings. In line with this, the Zacks Consensus estimate for the company’s earnings of $2.30 per share reflects a 4.1% year-over-year rise for the upcoming quarterly result.

L3 Technologies Inc. Price and EPS Surprise

L3 Technologies Inc. Price and EPS Surprise | L3 Technologies Inc. Quote

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Earnings Whispers

Our proven model does not show that L3 Technologies is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Earnings ESP: L3 Technologies has an Earnings ESP of -1.07%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: L3 Technologies carries a Zacks Rank #2, which increases the probability of earnings beat. But when combined with a negative earnings ESP, the Zacks Rank #2 makes surprise prediction difficult.

Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

A Stock That Warrants a Look

Here is a company in the Aerospace sector that has the right combination of elements to post an earnings beat this quarter.

Raytheon Company RTN has an Earnings ESP of +0.38% and a Zacks Rank #2. The company is expected to report second-quarter results on Jul 26. You can see the complete list of today’s Zacks #1 Rank stocks here.

Recent Defense Releases

Lockheed Martin LMT reported second-quarter 2018 adjusted earnings of $4.31 per share, beating the Zacks Consensus Estimate of $3.89 by 10.8%.

Textron TXT reported second-quarter 2018 earnings from continuing operations of 87 cents per share, which surpassed the Zacks Consensus Estimate of 70 cents by 24.3%.

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Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
 
Textron Inc. (TXT) : Free Stock Analysis Report
 
Raytheon Company (RTN) : Free Stock Analysis Report
 
L3 Technologies Inc. (LLL) : Free Stock Analysis Report
 
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