L-3 Communications Holdings Inc. is suitable for both the Defensive Investor and the Enterprising Investor. The Defensive Investor’s only concern is the low current ratio while the Enterprising Investor is concerned by the level of debt relative to the net current assets. As a result, all value investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.
From a valuation side of things, the company has grown its EPSmg (normalized earnings) from $7.38 in 2010 to only $8.08 for 2014. This demonstrated growth does not support the market’s implied estimate of 3.45% earnings growth. As a result, the ModernGraham valuation model returns an estimate of intrinsic value below the market price at this time, and the company appears to be overvalued by the market.
Be sure to check out previous ModernGraham valuations of L-3 Communications Holdings Inc. (LLL) for greater perspective!
Disclaimer: The author did not hold a position in L-3 Communications Holdings Inc. (LLL) at the time of publication and had no intention of changing that position within the next 72 hours. Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.