Will Sales Volume Benefit L3Harris (LHX) in Q4 Earnings?
L3Harris Technologies, Inc. LHX is slated to report fourth-quarter and full-year 2023 results on Jan 25, after market close.
L3Harris has a four-quarter average earnings surprise of 1.70%. The strong top-line performance across most of the company’s business segments is likely to have contributed to its overall fourth-quarter revenues. However, increased interest expenses might have had some impact on the bottom line.
Will the Integrated Mission Systems Unit Show Growth?
Higher sales volume from the commercial aviation business is expected to have favored the Integrated Mission Systems (IMS) segment’s quarterly top line.
However, lower revenues from Intelligence, Surveillance and Reconnaissance (ISR) solutions, owing to unfavorable timing of aircraft missionization revenues, as well as operational challenges within the Maritime business might have had adversely impacted the IMS segment’s overall revenue performance.
The Zacks Consensus Estimate for IMS’ fourth-quarter revenues is currently pegged at $1,712.7 million, indicating a decline of 5.5% from the year-ago quarter’s reported figure.
L3Harris Technologies Inc Price, Consensus and EPS Surprise
L3Harris Technologies Inc price-consensus-eps-surprise-chart | L3Harris Technologies Inc Quote
Other Units to Boost Revenues
Higher revenues from the Space and Intelligence businesses, owing to new production ramp-ups, as well as program growth in Mission Networks are likely to have added an impetus to this unit’s revenues.
The Zacks Consensus Estimate for Space and Airborne Systems’ revenues is pegged at $1,725.2 million, indicating an improvement of 7.2% from the year-ago quarter’s reported number.
Higher sales volume driven by increased demand, improved electronic component availability, as well as positive synergies from the acquisition of Tactical Data Links, is expected to have boosted Communication Systems’ top-line performance.
The Zacks Consensus Estimate for this unit’s revenues is pinned at $1,290.7 million, implying growth of 8.2% from the prior-year quarter’s reported actuals.
Fourth-Quarter Estimates
With the Space and Airborne Systems and the Communication Systems accounting for almost 76% of LHX’s total revenues, solid top-line performance from these segments might have outweighed the sales decline of the IMS unit.
This, in turn, is likely to have boosted the company’s overall revenues in the quarter to be reported. Also, revenues generated following the completion of the acquisition of Aerojet Rocketdyne must have added to LHX’s fourth-quarter top line.
The Zacks Consensus Estimate for fourth-quarter sales is pegged at $5.29 billion, indicating growth of 15.5% from the prior-year quarter’s reported figure.
Solid sales growth expectations must have benefited LHX’s bottom-line performance. Moreover, increasing commercial product deliveries, operational improvements and cost controls are likely to have benefited the company’s earnings. However, inflation-induced higher input costs and inflated interest expenses caused by increased interest rates might have had some adverse impact on its overall earnings growth.
The consensus estimate for fourth-quarter earnings is pinned at $3.31 per share, implying an increase of 1.2% from the year-ago quarter’s level.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for L3Harris Technologies this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
L3Harris has an Earnings ESP of +0.09% and a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Below are three other defense stocks that also have the right combination of elements to post an earnings beat this time around.
The Boeing Company BA is slated to release fourth-quarter results on Jan 31. BA has an Earnings ESP of +12.32% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Boeing delivered a four-quarter average negative earnings surprise of 903.50%. The consensus estimate for fourth-quarter loss is pegged at 72 cents per share, while that for sales is pinned at $21.23 billion.
Leidos LDOS is scheduled to release fourth-quarter results on Feb 13. LDOS has an Earnings ESP of +1.88% and a Zacks Rank #2 at present.
Leidos delivered a four-quarter average earnings surprise of 11.51%. The Zacks Consensus Estimate for LDOS’ fourth-quarter earnings is pegged at $1.73 per share, while that for sales is pinned at $3.79 billion.
Northrop Grumman NOC is slated to report fourth-quarter results on Jan 25. NOC has an Earnings ESP of +1.49% and a Zacks Rank #3 at present.
NOC delivered a four-quarter average earnings surprise of 6.79%. The consensus mark for NOC’s fourth-quarter earnings is pegged at $5.75 per share, while that for sales is pinned at $10.44 billion.
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The Boeing Company (BA) : Free Stock Analysis Report
Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report
L3Harris Technologies Inc (LHX) : Free Stock Analysis Report
