Continuous and valuable contract wins in the past have contributed to the steady upward spiraling in the share price of Harris Corporation (HRS), and have finally enabled this leading supplier of communications equipment and services to attain an all-time high of $79.32 on May 27, 2014.
The stock price has surged 50% in the past one year mainly due to improved foreign defense expenditure, a strong tactical radio order and growth in the Government Communication segment. So far in the year, share price has increased 12.4%.
Harris’ RF Communications segment is gaining momentum in international markets and this trend is only likely to continue since Harris’ next-generation Falcon III tactical radio is receiving increasing market traction. Moreover, the company has raised its earnings outlook for fiscal 2014 primarily on the back of 3% annual growth in international military spending.
Harris has been selected as one of the 20 contractors to compete for work under the Global Tactical Advanced Communications Systems contract initiated by the U.S. Army’s Program Executive Office-Command Communications and Control. The total value of the contract is $10 billion over a 5-year period and entails Harris to supply advanced communications technologies such as wireless networking and tactical satellite communications. The second quarter of fiscal 2014 saw new orders worth $1.47 billion against $1.36 billion in the prior-year quarter while the book-to-bill ratio for the same quarter stood at 1.20, up 30%.
The company has also boosted shareholders’ wealth by paying uninterrupted dividends for more than 31 years, which reflects Harris’ commitment toward creating value for its shareholders.
It is worth noting in this regard that Harris’s earnings have surpassed the Zacks Consensus Estimate in all of the last four quarters, with an average earnings surprise of 10.8%. Over the last 30 days, the Zacks Consensus Estimate for the current year has increased 1.4% to $5.00.
Harris currently has a Zacks Rank #3 (Hold).
Other Stocks to Consider
Other stocks worth reckoning in the wireless equipment industry include Juniper Networks, Inc. (JNPR), Ubiquiti Networks, Inc. (UBNT) and InterDigital, Inc. (IDCC). All the three stocks carry a Zacks Rank #2 (Buy).