Critical Analysis: L-3 Communications Holdings (LLL) versus Its Competitors

L-3 Communications Holdings (NYSE: LLL) is one of 49 public companies in the “Aerospace & Defense” industry, but how does it compare to its competitors? We will compare L-3 Communications Holdings to similar businesses based on the strength of its institutional ownership, risk, earnings, profitability, analyst recommendations, dividends and valuation.

Insider and Institutional Ownership

79.4% of L-3 Communications Holdings shares are owned by institutional investors. Comparatively, 70.3% of shares of all “Aerospace & Defense” companies are owned by institutional investors. 2.9% of L-3 Communications Holdings shares are owned by company insiders. Comparatively, 7.0% of shares of all “Aerospace & Defense” companies are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

L-3 Communications Holdings has a beta of 1.18, meaning that its stock price is 18% more volatile than the S&P 500. Comparatively, L-3 Communications Holdings’ competitors have a beta of 1.06, meaning that their average stock price is 6% more volatile than the S&P 500.

Dividends

L-3 Communications Holdings pays an annual dividend of $3.00 per share and has a dividend yield of 1.6%. L-3 Communications Holdings pays out 41.3% of its earnings in the form of a dividend. As a group, “Aerospace & Defense” companies pay a dividend yield of 1.4% and pay out 35.1% of their earnings in the form of a dividend. L-3 Communications Holdings has increased its dividend for 13 consecutive years.

Profitability

This table compares L-3 Communications Holdings and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
L-3 Communications Holdings 5.22% 14.00% 5.59%
L-3 Communications Holdings Competitors -4.85% 24.07% 3.89%

Analyst Recommendations

This is a breakdown of recent ratings and target prices for L-3 Communications Holdings and its competitors, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
L-3 Communications Holdings 0 5 4 1 2.60
L-3 Communications Holdings Competitors 478 2152 2376 84 2.41

L-3 Communications Holdings currently has a consensus price target of $193.89, indicating a potential upside of 3.95%. As a group, “Aerospace & Defense” companies have a potential upside of 4.55%. Given L-3 Communications Holdings’ competitors higher possible upside, analysts plainly believe L-3 Communications Holdings has less favorable growth aspects than its competitors.

Valuation and Earnings

This table compares L-3 Communications Holdings and its competitors revenue, earnings per share (EPS) and valuation.

Gross Revenue NetIncome Price/Earnings Ratio
L-3 Communications Holdings $10.51 billion $710.00 million 25.66
L-3 Communications Holdings Competitors $8.76 billion $783.10 million 150.48

L-3 Communications Holdings has higher revenue, but lower earnings than its competitors. L-3 Communications Holdings is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Summary

L-3 Communications Holdings beats its competitors on 8 of the 15 factors compared.

L-3 Communications Holdings Company Profile

L3 Technologies, Inc., formerly L-3 Communications Holdings, Inc., is a prime contractor in Intelligence, Surveillance and Reconnaissance (ISR) systems, aircraft sustainment, simulation and training, night vision and image intensification equipment and security and detection systems. The Company provides a broad range of communication and electronic systems and products used on military and commercial platforms. It operates through four segments: Electronic Systems, Aerospace Systems, Communication Systems and Sensor Systems. Electronic Systems provides a broad range of products and services for military and commercial customers in several niche markets across several business areas. Aerospace Systems delivers integrated solutions and provides engineering, modernization, upgrade, sustainment, and maintenance and logistics support. Communication Systems delivers products and services for the global communications market. Sensor Systems provides diverse sensor technologies.

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