Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, military contractor L-3 Communications Holdings (NYSE: LLL ) has earned a respected four-star ranking.
With that in mind, let's take a closer look at L-3's business and see what CAPS investors are saying about the stock right now.
L-3 facts
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Headquarters (Founded)
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New York (1997)
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Market Cap
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$9 billion
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Industry
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Aerospace and defense
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Trailing-12-Month Revenue
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$15.66 billion
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Management
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Chairman/CEO Michael Strianese
CFO Ralph D'Ambrosio
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Return on Equity (Average, Past 3 Years)
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14.9%
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Cash/Debt
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$548 million / $4.1 billion
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Dividend Yield
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2.1%
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Competitors
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Boeing (NYSE: BA )
Honeywell International (NYSE: HON )
Raytheon (NYSE: RTN )
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Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 96% of the 929 members who have rated L-3 believe the stock will outperform the S&P 500 going forward. These bulls include kenjotto and All-Star TMFDeej, who is ranked in the top 1% of our community.
Just last week, kenjotto applauded the recent news that activist investment firm Relational Investors LLC has become L-3's largest shareholder:
[L-3 Communications] was a well run company with some impressive products and skills in the defense sector. Now it's a well run company with impressive products and skills in the defense sector AND there's a historically successful activist fund pushing to unlock shareholder value. I'm in!
In fact, L-3 currently sports a cheapish price-to-cash flow of 6.8. That represents a clear discount to rivals like Boeing (23.3), Honeywell (14.6), and Lockheed (10.5).
CAPS All-Star TMFDeej elaborates on the opportunity:
To unlock value, Relational is pushing for the sale or spin-off of business units that it believes are dragging down L-3's performance. This may include the sale of the company's low-margin, no growth government-services division and its aircraft-maintenance division.
Divesting these businesses would enable L-3 to focus its resources on growing its high-margin businesses, including such as electronic systems and surveillance / intelligence.
What do you think about L-3, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!
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