L-3 Communications ( LLL )

Discussion in 'Stocks' started by Apex Capital, Sep 16, 2005.

  1. Check out this new wireless "secured" portable version of a Blackberry for the Department of Defense and NSA that will support voice and data communications up to security levels of Top Secret:

  2. The low is in.


  4. Garbage?

    This is one of the most well managed electronics defense companies in the world, let alone well run company period.

    CEO Frank Lanza is an incredible CEO.
    I have owned close to a 7 figure position in this company since the IPO back in 1998. Anyone that has ever listened to an L-3 Communications quarterly conference call knows how great this company and their management team is, having grown from just $600 million in revenues to now well over $9 billion since 1998.

    I suggest you spend more time figuring out why your Level 1 boxes on Hammer aren't working with Island and Arca than taking ignorant and childish potshots at a company that you have no clue about.

    After all, this is a stock specific thread.
  5. Chagi


    I took a quick look over their fundamentals, here is a brief summary of the things that I liked and disliked:


    - Company is actually profitable. Sounds simplistic, but there sure are a lot of companies trading that seem to rely on constant equity issues as their sole business model.

    - Roughly 119 million shares o/s, not toooo bad for a company of this size

    - Revenue is growing, though not at a stellar rate (most recent quarter over quarter growth was about 5%), big company though, so rapid revenue growth at this point is fairly unlikely


    - A very significant portion of the company's assets section ($4.5 billion) is Goodwill. I'm not an accountant, so I'm not going to comment on this in detail, but it's worth noting that a very significant portion of the company's stated long-term assets are an intangible asset. Perhaps they are overpaying by a great deal when they have been aquiring other companies (goodwill is recognized when you pay a higher price than fair value of a company's net assets).

    - Inventory seems a bit on the large side to me ($2.3 billion), and is growing. I would like to see some stats on inventory turnover, can't say much more without spending more time to familiarize myself with their business model.

    - Accounts payable seems very high ($1.1 billion) in relation to cash & equivalents ($410 million)

    - $2.1 billion in long-term debt. This isn't as big of a factor right now due to the fact that we're in a low interest rate environment, but what happens once rates start to go up?

    - Low gross margins - 15%. This is another case where I can't comment too much, but this company appears to have very high percentage costs for each dollar of revenue.
  6. gr8stock


    You must be kidding. $18 million order for a 9.6 Billion market cap company would not even cover their one day lunch expenses.
  7. No, I am not kidding.
    If you notice the way that this company announces its contract news, this is quite common. It is a subcontractor to the LMT's and GD's of the world.

    I posted the contract announcement not because it was going to move the stock, but because it is a very interesting part of the marketplace, ie. secured blackberry communications.
  8. This is commonplace in the defense industry.
    Feel free to listen to their upcoming quarterly conference call.
    The company is split into 4 different profit divisions, thus allowing shareholders and the Street a lot of transparency. CEO Lanza is an incredibly experienced manager in the defense electronics business.
    I think that you will be very impressed with the CC.
    Cai von Rumohr of Cowen & Company has been the biggest bull on the company, and has also been the analyst that has performed the best in the sector as well.
    In any event, do your own DD.

    I am a buyer of the stock here today and on dips with a stop at the last previous lows at $77.61 for a trade back up to the highs.

    At 16.3 times 2006 estimated EPS, there is a nice trade evolving here . . . Furthermore, the stock is actually looking to close higher than last Friday's Weekly close at $78.36, which I believe is pretty rare given the bearish activity that the markets have endured in the past week.
  9. Stock continues to act very well relative to the broader market, now trading up towards $81.00 since my trade recommendation last Friday.

    Could possibly run all the way into the earnings date of Oct. 26th and taking out the previous 52 week highs with it at $84.84
  10. Above $81.06 which is a previous chart high, LLL could really make a nice run . . . Now trading back above the 10, 21, and 40 day MA's.

    Defense sector running VERY strong today!
    GBA, GD, LLL, LMT, and NOC.

    Great sector rotation into DEFENSE.
    #10     Oct 19, 2005