HRS

Harris Corp

Industrial/Transportation, Event Driven/Special Sit


Presented:04/10/2019
Price:$162.69
Cap:$19.19B
Current Price:$178.09
Cap:$33.68B

Presented

Date04/10/2019
Price$162.69
Market Cap$19.19B
Ent Value$19.22B
P/E Ratio23.02x
Book Value$28.97
Div Yield1.68%
Shares O/S117.96M
Ave Daily Vol949,824
Short Int10.85%

Current

Price$178.09
Market Cap$33.68B
Harris Corp. engages in the provision of technology-based solutions for tactical communications, geospatial systems and services, air traffic management, avionics and electronic warfare, and space and intelligence. It operates through the following business segments: Communication Systems, Electronic Systems, Space and Intelligence Systems, and Corporate. The Communication Systems segment services markets in tactical communications and defense products, including tactical ground and airborne radio communications solutions and night vision technology, in public safety networks. The Electronic Networks Systems segment provides electronic warfare, avionics, command, control, communications, computers, intelligence, surveillance and reconnaissance solutions for the defense industry and air traffic management solutions for the civil aviation industry. The Space and Intelligence systems provides intelligence, space protection, geospatial, complete earth observation, universe exploration, positioning, navigation and timing, environmental solutions for national security, defenses, civil and commercial customers, using advanced sensors, antennas and payloads, as well as ground processing and information analytics. The company was founded in 1926 and is headquartered in Melbourne, FL.

Publicly traded companies mentioned herein: Elbit Systems Inc (ESLT), Harris Corp (HRS), L3 Technologies Inc (LLL), Lockheed Martin Corporation (LMT), Northrop Grumman Corp (NOC)

Highlights

With Harris Corp (HRS) and L3 Technologies (LLL) set to combine in a merger of equals (announced October 2018, expected to close by June 30, 2019), the presenter sees a favorable risk/reward setup for a long position in HRS stock. HRS’ William Brown will lead the combined company as Chairman & CEO, with LLL’s CEO, Chris Kubasik holding the title of Vice Chairman & COO. Assuming the pro forma company can generate ~$14/share of cash flow looking three years out, the stock could be worth $210 - $225 within 24 - 30 months (a mid-teens multiple is fair), providing patient investors with a “low-beta 30% - 40% return.”

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Idea Discussion

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