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
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
Headquarters (Founded) |
New York (1997) |
Market Cap |
$9 billion |
Industry |
Aerospace and defense |
Trailing-12-Month Revenue |
$15.66 billion |
Management |
Chairman/CEO Michael Strianese CFO Ralph D'Ambrosio |
Return on Equity (Average, Past 3 Years) |
14.9% |
Cash/Debt |
$548 million / $4.1 billion |
Dividend Yield |
2.1% |
Competitors |
Boeing
Honeywell International
Raytheon |
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.
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