Harris Crushes Earnings Estimates

Harris (NYSE: HRS  ) reported earnings on July 30. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended June 28 (Q4), Harris beat expectations on revenues and crushed expectations on earnings per share.

Compared to the prior-year quarter, revenue shrank. Non-GAAP earnings per share shrank. GAAP earnings per share shrank significantly.

Gross margins increased, operating margins contracted, net margins shrank.

Revenue details
Harris chalked up revenue of $1.36 billion. The nine analysts polled by S&P Capital IQ expected sales of $1.31 billion on the same basis. GAAP reported sales were 26% higher than the prior-year quarter's $1.08 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $1.41. The 11 earnings estimates compiled by S&P Capital IQ averaged $1.15 per share. Non-GAAP EPS of $1.41 for Q4 were 0.7% lower than the prior-year quarter's $1.42 per share. (The prior-year quarter included -$3.75 per share in earnings from discontinued operations.) GAAP EPS of $0.51 for Q4 were 53% lower than the prior-year quarter's $1.08 per share. (The prior-year quarter included -$3.75 per share in earnings from discontinued operations.)

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 34.7%, 380 basis points better than the prior-year quarter. Operating margin was 12.6%, 830 basis points worse than the prior-year quarter. Net margin was 4.1%, 790 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $1.23 billion. On the bottom line, the average EPS estimate is $1.12.

Next year's average estimate for revenue is $5.05 billion. The average EPS estimate is $4.73.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 610 members out of 630 rating the stock outperform, and 20 members rating it underperform. Among 178 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 173 give Harris a green thumbs-up, and five give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Harris is hold, with an average price target of $51.00.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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