L-3 Communications Holdings, Inc. (LLL) announced its new share repurchase program. Effective immediately, the company will be able to buy back up to an additional $1.5 billion of the company’s common stock through April 30, 2013.
L-3 Communicationsis expected to use cash on hand and cash generated from operations for the share repurchases. Share repurchases are a central element of the company’s disciplined capital deployment strategy and reflects its ongoing commitment to deliver value to its shareholders.
Under the program, depending on the market conditions and management’s discretion, repurchases will be made in accordance with applicable federal securities laws. The program is subject to extension, suspension, or discontinuation at any time without prior notice.
The company will also pay a dividend of 45 cents per share on June 15, 2011, to shareholders of record at the close of business on May 17, 2011.
In July 2010, L-3 Holdings’ board of directors had approved a new share repurchase program that authorized a maximum buyback of an additional $1 billion of its outstanding shares of common stock through December 31, 2012. In August 2010, L-3 Holdings completed its previously announced $1.0 billion share repurchase program, which was approved on November 24, 2008.
L-3 Communications is one of the best-positioned pure defense players based on its non-platform focus, broad diversification of programs, strong order bookings and order backlog, robust cash flow generation and its focus on shareholder value. L-3 Communications’ strong balance sheet provides financial flexibility in matters of incremental dividend, ongoing share repurchase and earnings accretive acquisitions.
However, this is offset by the loss of key contracts, a backlog skewed toward fixed price contracts and apprehensions over defense spending under the Obama administration. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
Recently, L-3 Communications Holdings Inc. reported first quarter 2011 diluted earnings per share of $1.85, comfortably surpassing the Zacks Consensus Estimate of $1.78. However, the result came in below the year-ago quarterly earnings of $1.87 per share. In the reported quarter, the company generated net cash of $220 million from operating activities, up $51 million from $271 million of cash generated in the year-ago quarter. The company ended the quarter with cash and cash equivalents of $548 million, while long-term debt stood at $4.1 billion.
From January 1, 2011 through February 24, 2011, L-3 Communications repurchased 1,367,992 shares of its common stock at an average price of $77.70 per share for an aggregate amount of approximately $106 million. Overall, during the reported quarter, the company repurchased shares worth $205 million and distributed $49 million as dividends.
Yesterday, one of the competitors of L-3 Communications, Lockheed Martin Corporation (LMT), posted first-quarter 2011 operating earnings of $1.55 per share, beating both the Zacks Consensus Estimate of $1.51 and year-ago quarterly earnings of $1.38 by margins of 4 cents and 17 cents, respectively.
Based in New York City, L-3 Communications is a prime contractor in C3ISR (Command, Control, Communications, Intelligence, Surveillance and Reconnaissance) systems, aircraft modernization and maintenance, and government services. L-3 is also a leading provider of a broad range of electronic systems used on military and commercial platforms.
L-3 COMM HLDGS (LLL): Free Stock Analysis Report
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