L3 Technologies Hits 52-Week High on Order Flow & Backlog
L3 Technologies, Inc. LLL hit a new 52-week high of $209.98 during yesterday’s trading session before closing a tad lower at $209.46. The stock has delivered a one-year return of about 40.9%.
Over the past 52 weeks, L3 Technologies’ share price has ranged from a low of $146.88 to a high of $209.98. Average volume of shares traded over the last three months is approximately 0.55 million.
What is Driving L3 Technologies?
L3 Technologies is a consistent performer and has reported positive earnings surprises in each of the last four quarters with an average beat of 9.13%. Its expected long-term earnings growth rate (three to five years) is 6.78%.
Thanks to its quality product offerings, the company continuously receives contracts from the U.S. defense establishments and foreign governments. Funded backlog at the end of third- quarter 2017 was $9 billion, reflecting sequential growth of 5.8%.
Apart from generating substantial organic revenue growth, thanks to its varied product range, L3 Technologies gains from inorganic growth. The strategic acquisitions made by the company have widened its market and created more opportunities.
In addition to its strong presence in the U.S. defense space, the company continues to enjoy a steady flow of Foreign Military Sales (FMS) contracts. The company is expected to benefit from a large addressable international market with sales directly to foreign allied governments and under FMS agreements between the U.S. government and foreign governments.
Other Defense Players Moving Up
Trump’s presidency has been a boon for the Zacks Aerospace sector , which was grappling with the budget sequestration implemented by the prior government. The fiscal 2018 (FY18) defense budget, reflecting a 10% hike from the FY16 level, was a major forerunner for this sector’s growth at the beginning of 2017. Notably, the FY18 defense policy bill worth $700 billion that extensively surpassed Trump’s budget request took stocks to new heights.
The increase in the defense budget will also result in new orders for the major defense contractors and will have a positive impact on their performance and prices. Apart from L3 Technologies, other defense operators like Textron Inc. TXT, Lockheed Martin Corporation LMT and Northrop Grumman Corporation NOC also touched their respective 52-week highs yesterday.
L3 Technologies has returned 40.9% in the past year, which is in line with the industry’s gain but much better than the S&P 500’s return of 23.2%.
The company’s performance is driven by its non-platform-centric focus and broad diversification of programs.
L3 Technologies has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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