7. L3Harris Technologies Inc. (NASDAQ:LHX)
Number of Hedge Fund Investors: 40
Jim Cramer recently commented on L3Harris Technologies Inc. (NASDAQ:LHX), noting that the company’s strength lies in its focus on high-tech and defense sectors, which are both strong long-term trends.
“L3 Harris remains strong due to its combination of high-tech and defense, two robust long-term trends. The previous CEO was someone I knew, and while I don’t know the current CEO personally, the company is still solid.”
In its Q2 2024 earnings report, L3Harris Technologies Inc. (NASDAQ:LHX) reported strong financial performance, with earnings per share (EPS) of $3.29 and revenue of $4.8 billion, reflecting a 5% year-over-year increase. This growth was driven by high demand for its space and airborne systems, especially in intelligence, surveillance, and reconnaissance (ISR) solutions, along with continued success in communication systems tied to military modernization.
L3Harris Technologies Inc. (NASDAQ:LHX)’s positive outlook is further supported by recent developments. The acquisition of Aerojet Rocketdyne, a leading propulsion systems provider, is expected to enhance L3Harris Technologies Inc. (NASDAQ:LHX)’s capabilities in space and missile defense, creating new growth opportunities and synergies.
Additionally, L3Harris Technologies Inc. (NASDAQ:LHX) secured a multi-billion-dollar contract with the U.S. Department of Defense for advanced communication and electronic warfare systems, reinforcing its critical role as a defense supplier and bolstering its revenue outlook with a strong backlog.
Here’s what L3Harris Technologies Inc. (NASDAQ:LHX)’s CFO, Kenneth L. Bedingfield, has to say in their latest earnings call:
“I’ll start with consolidated results for the quarter. Demand remains high, and in the second quarter we were awarded over $5 billion in new awards, resulting in a book-to-bill of $1.0, and total backlog of $32 billion. We were awarded a nearly $900 million contract for the delivery of electronic time fuses, which play a crucial role in replenishing our nation’s critical ammunitions inventory. We were also awarded a $1 billion IDIQ contract with an initial task order of $123 million to supply the next lot of multi-functional information distribution systems, jitters terminals to the U.S. Navy, leveraging the unique capabilities of the TDL product line that we acquired last year. Consolidated revenue grew 13% or 1% organically.
Operating margins continued to be strong, expanding to 15.6%, up 80 basis points, reflecting improved operational and program performance across all segments with LHX NeXt cost savings contributing. Chris highlighted our EPS growth of 9% as a result of strong operational performance. I’d like to add that on a pension-adjusted basis, second quarter EPS was up 13% as profitable growth drops to the bottom line. Free cash flow was 714 million for the second quarter driven by increased operating income and improved working capital performance. In the quarter, we repaid a $350 million note which helped reduce our net leverage to 3.2 times down from 3.5 times in the previous quarter. By segment, organic growth within our communication system segment was over 4% from higher production rates and deliveries of resilient communication products.” (Click here to see more…)
