L-3 Communications (LLL) Clinches $302M US Navy Contract

L-3 Communications Vertex Aerospace LLC, a subsidiary of L-3 Communications Holdings Inc. LLL, recently received a contract from the U.S. Navy for logistics services for the C-12 utility lift aircraft. The contract is valued at $302.2 million and will run through Jul 2021.

Per the contract, the company will be responsible for post-production services, full aircraft maintenance, logistics support and the supply of materials for Marine Corps Reserve C-12 and US Navy TC-12B trainer aircraft.

Modeled on Beechcraft Super King Air and Beechcraft 1900, C-12 Huron is the military version of an executive passenger and transport aircraft. It is mainly used by the U.S. Air Force, U.S. Navy, U.S. Army and U.S. Marine Corps for a wide array of functions including range clearance, embassy support, medical evacuation, VIP transport, passenger and light cargo transport.

L-3 Communications is one of the prime system contractors for aircraft modernization and maintenance; Intelligence, Surveillance & Reconnaissance (“ISR”) collection platforms; simulation and training; and government systems support services.

Further, the company is a pure-play provider of defense electronics and highly engineered products and services, and its strategy of gradually transforming its business portfolio to focus on defense electronics, communications and ISR markets will likely boost sales and margins, going forward.

Meanwhile, L-3 Communications recently reported first-quarter 2016 results wherein earnings and revenues beat Street expectations by 32.5% and 0.6%, respectively. Earnings also improved from the year-ago figure, driven by stronger-than-expected margins at Aerospace.

The company currently has a Zacks Rank #3 (Hold).

Stocks to Consider

Better-ranked stocks in the aerospace and defense space include Engility Holdings, Inc. EGL, BAE Systems plc BAESY and CAE Inc. CAE. While BAE Systems carries a Zacks Rank #1 (Strong Buy), Engility Holdings and CAE hold a Zacks Rank #2 (Buy).

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