Will Segment Sales Benefit L3Harris Technologies in Q3 Earnings?

L3Harris Technologies, Inc. (LHX) is set to announce its third-quarter 2024 earnings results on October 24, after the market closes.

Keep an eye on the Zacks Earnings Calendar to stay updated on important market news.

L3Harris has an average earnings surprise of 3.31% over the past four quarters. The company is likely to report strong earnings driven by solid sales growth across its various business segments, despite facing the challenges of rising interest expenses.

LHX's Integrated Mission Systems Unit: A Mixed Outlook

Sales growth from the maritime sector is expected to positively influence the Integrated Mission Systems (IMS) segment during the quarter. However, the segment's overall performance might be partially affected by lower sales from the commercial aviation sector.

The Zacks Consensus Estimate for IMS revenue in the third quarter stands at $1,632.4 million, reflecting a 4.1% increase compared to the same period last year.

LHX's Other Business Units Likely to Drive Revenue Growth

Robust sales increases from the Space Systems and Intel & Cyber programs are anticipated to contribute significantly to the revenue of the Space and Airborne Systems (SAS) unit. The current Zacks Consensus Estimate for SAS revenue is $1,739.5 million, which indicates a 3.2% improvement from last year's figures.

Furthermore, the Communication Systems unit is expected to see a surge in revenue, bolstered by higher sales from the Tactical Communication and Broadband Communications sectors. For this unit, the Zacks Consensus Estimate for revenue is projected at $1,353.3 million, marking a growth of 7.8% from the previous year.

Q3 Revenue Expectations for L3Harris

With all major segments showing strong growth potential, it's reasonable to expect L3Harris to achieve significant revenue growth in the upcoming quarter. Additionally, the positive synergies resulting from the acquisition of Aerojet Rocketdyne should further enhance L3Harris' performance.

The overall sales for the third quarter are estimated to reach $5.30 billion, representing a 7.9% increase compared to the same quarter last year.

These solid sales forecasts are likely to benefit L3Harris' bottom line as well. Improved operating margins, driven by enhanced operational efficiencies, successful program execution, and cost-cutting measures, are expected to bolster earnings. However, the pressure from higher interest expenses might slightly dampen overall earnings growth.

The consensus estimate for earnings in the third quarter is $3.26 per share, which implies a 2.2% rise compared to the same quarter a year earlier.

Predictions Based on Zacks Model for LHX

According to our established model, L3Harris is likely to report an earnings beat this time. A combination of a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold) enhances the likelihood of an earnings beat, which applies in this case as detailed below.

LHX's Earnings ESP: L3Harris holds an Earnings ESP of +1.19%, indicating potential for an earnings surprise. You can utilize the Earnings ESP Filter to identify stocks likely to report better-than-expected earnings.

LHX's Zacks Rank: Currently, L3Harris has a Zacks Rank of #3.

Other Noteworthy Companies to Watch

Several other companies in the sector also display promising indicators of upcoming earnings beats. For instance, Lockheed Martin (LMT) is scheduled to announce its third-quarter earnings on October 22, before the market opens. Lockheed has an Earnings ESP of +1.29% and currently holds a Zacks Rank of 3. The consensus estimate for Lockheed’s third-quarter earnings stands at $6.47 per share, with sales estimated at $17.28 billion, reflecting a 2.4% increase from the previous year.

Northrop Grumman (NOC) is also set to report its Q3 results on October 24, prior to market opening. Northrop carries an Earnings ESP of +1.12% and holds a Zacks Rank of 2. The consensus estimate for its earnings per share is $6.06, with sales expected at $10.23 billion, marking a 4.7% increase year-over-year.

Curtiss-Wright Corp. (CW) will release its third-quarter earnings on October 30, after market close. Curtiss-Wright has an Earnings ESP of +0.54% and is currently rated a Zacks Rank of 1. The consensus estimate for its third-quarter earnings is $2.70 per share, indicating a 6.3% improvement from the year-ago quarter, with sales projected at $757 million, representing a 4.5% increase compared to last year.

Earnings, Revenue, Sales