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L3 Technologies Wins Navy Deal to Build AN/SRQ-4 Systems

Zacks Equity Research

L3 Technologies Inc. LLL recently secured a contract to manufacture, test, deliver, manage and support the common data link (CDL) Hawklink AN/SRQ-4 systems for the MH-60R aircraft. Majority of the task will be executed in Salt Lake City, UT.

Valued at $13 million, the contract was awarded by the Naval Air Systems Command, Patuxent River, Maryland. Work related to the deal is scheduled to be over by December 2020.

A Brief Note on AN/SRQ-4 Systems

L3 Technologies’ next-generation AN/SRQ-4 provides Command/Control, sensor data transfer, data link operation and comprehensive built-in test. Radar, video, network and acoustic data interfaces meet shipboard interface requirements. CDL Hawklink offers real time exploitation of aircraft sensors, extending situational awareness over the horizon.

What’s Favoring L3 Technologies?

Sporadic terrorist attacks and widespread geopolitical unrest have disrupted global peace. In this backdrop, military command and control depend on a complex communication network of equipment to relay information among forces for functioning effectively.

Now, L3 Technologies’ Communication Systems provide network and communication systems, secure communications products, radio frequency (RF) components, satellite communication terminals and space, microwave and telemetry products. These products include secure data links that are used to connect a variety of space, airborne, ground and sea-based communication systems and are used in transmission, processing, recording, monitoring and dissemination functions of these communication systems.

Surely, such a diverse product portfolio offered by the company enjoys a solid demand in the U.S. defense space. The latest contract win is an example to that.

With the U.S. government constructively engaged in strengthening its borders in all aspects, the administration is lately enhancing its electronic warfare, C4ISR (Command, Control, Communication, Computers, Intelligence, Surveillance and Reconnaissance) and cyber security.

Considering this, we may expect L3 Technologies to win more such contracts from the Pentagon in days ahead, which in turn, might boost the company’s profit margin substantially.

Price Movement

In a year’s time, L3 Technologies’ stock has lost 14.7% compared with the industry’s 13.5% decline.


Zacks Rank & Key Picks

L3 Technologies currently carries a Zacks Rank #3 (Hold).

A few better-ranked companies in the same sector are AeroVironment, Inc. AVAV, Esterline Technologies Corporation ESL and Northrop Grumman Corporation NOC. While AeroVironment and Esterline Technologies sport a Zacks Rank #1 (Strong Buy), Northrop Grumman carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AeroVironment delivered average positive earnings surprise of 257.01% in the last four quarters. The Zacks Consensus Estimate for fiscal 2019 earnings has moved 33.3% up to $1.48 over the past 90 days.

Esterline Technologies delivered average positive earnings surprise of 22.93% in the trailing four quarters. The Zacks Consensus Estimate for fiscal 2019 earnings has increased 1.5% to $4.77 over the past 60 days.

Northrop Grumman delivered average positive earnings surprise of 28.01% in the preceding four quarters. The Zacks Consensus Estimate for 2019 earnings has climbed 3.53% to $18.44 over the past 60 days.

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