Harris Corporation (NYSE: HRS) is
an international communications and information technology company serving government and commercial markets in more than 150 countries. The firm offers information networks, reconnaissance solutions, RF communications systems, air traffic control systems, commercial broadcast hardware, and wireless transmission networking products. The company's largest customer is the US government. It's commercial client list includes Clear Channel Communications (NYSE: CCU), Sony (NYSE: SNE) and Lockheed Martin (NYSE: LMT).
The firm surprised the Street last week, when it announced fiscal Q2 EPS of 87 cents and revenues of $1.32 billion. Analysts had been expecting 81 cents and $1.25 billion. Management also guided FY08 EPS to $3.45-$3.55 ($3.43 consensus) and FY08 revenues to $5.2-$5.3 billion ($5.16B consensus). The CEO attributed the favorable outlook largely to increasing strength in the company's RF communications tactical radio business. CL King subsequently initiated coverage of the issue with a "strong buy" rating and a $72 price target.
HRS shares
popped on the news and have since been defining a bullish "flag" consolidation pattern. Stocks frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Altogether, brokers now recommend HRS with six "strong buys", one "buy", one "hold" and one "sell". Analysts see a 17% average annual growth rate, through the next five years. The stock's P/E ratio (14.59), PEG ratio (0.88), Price to Sales ratio (1.54), Price to Book ratio (3.37), Price to Cash Flow ratio (10.94), Sales Growth rate (29.67%), Return on Assets (12.99%), Return on Investment (18.17%) and Return on Equity (25.81%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 83% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks it has traded between $44.11 and $66.94. A stop-loss of $46.50 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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Reader Comments (Page 1 of 1)
3-20-2008 @ 7:59AM
AD said...
What are your thoughts on recent partnership with Voyant International on the Aviationi Broadband front ?
3-11-2008 @ 4:49PM
ldschutts said...
The Harris partnership with Voyant International seems to be another instance of the general technology move toward universal connectivity. Note that this is a longer-term issue. Voyant does not intend to launch its aviation broadband service for another year. It seems best to accept the news as evidence that Harris intends to stay with the game.....good news for the longer-term investor. Note that Voyant is a penny stock and
should probably be avoided for that reason.....unless you can watch it
like a hawk.
Larry Schutts