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Summary

  • 4 insiders sold L-3 Communications stock within one month.
  • The stock was not purchased by any insiders in the month of intensive selling.
  • 2 of these 4 insiders decreased their holdings by more than 10%.

L-3 Communications Holdings (NYSE:LLL) provides command, control, communications, intelligence, surveillance, and reconnaissance systems; aircraft modernization and maintenance; and national security solutions in the United States and internationally.

(click to enlarge)

Insider selling during the last 30 days

Here is a table of L-3 Communications' insider activity during the last 30 days.

NameTitleTrade DateShares SoldOption Exercise & SaleRule 10b5-1Current OwnershipDecrease In Ownership
John MegaSVPJune 426,567YesNo12,414
shares
68.2%
Steve KantorSVPJune 229,512YesNo28,642 shares + 48,478 options27.7%
Michael StrianeseCEOMay 1460,000YesNo150,613
shares + 1,177,751 options
4.3%
Alan WashkowitzDirectorMay 142,000NoNo36,505 shares + 19,046 options3.5%

There have been 118,079 shares sold by insiders during the last 30 days.

Insider selling by calendar month

Here is a table of L-3 Communications' insider activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
June 201456,0790
May 201477,9750
April 201400
March 201427,0160
February 2014380,1650
January 201400
December 201300
November 201322,8280
October 2013120,0850
September 201300
August 2013233,3820
July 2013193,0610
June 201300
May 201315,9370
April 20138,0990
March 201300
February 2013102,4780
January 201300

There have been 1,237,105 shares sold and there have been zero shares purchased by insiders since January 2013.

Financials

L-3 Communications reported the first-quarter financial results on May 1 with the following highlights:

Revenue$3.0 billion
Net income$180 million
Cash$227 million
Debt$3.6 billion
Funded orders$3.0 billion
Funded backlog$10.4 billion

The four insiders sold their shares after these results.

(click to enlarge)

(Source: Investor presentation)

L-3 Communications had negative revenue growth in the first quarter.

Outlook

L-3 Communications' 2014 guidance is as follows:

Revenue$11,950-$12,150 million
EPS$8.20-$8.40

(click to enlarge)

(Source: Investor presentation)

Competition

L-3 Communications' competitors include Honeywell (NYSE:HON), Lockheed Martin (NYSE:LMT), and Raytheon (NYSE:RTN). Here is a table comparing these companies.

CompanyLLLHONLMTRTN
Market Cap:10.85B74.33B51.83B30.18B
Employees:48,000131,000115,00063,000
Qtrly Rev Growth (yoy):-0.070.04-0.04-0.06
Revenue:12.42B39.41B44.94B23.34B
Gross Margin:0.100.280.110.22
EBITDA:1.50B6.54B5.62B3.42B
Operating Margin:0.100.140.110.13
Net Income:765.00M3.98B3.12B1.99B
EPS:8.444.999.676.44
P/E:14.9019.0217.0114.98
PEG (5 yr expected):3.551.661.721.22
P/S:0.881.891.171.31

L-3 Communications has the highest PEG ratio among these four companies.

Here is a table of these competitors' insider activities this year.

CompanyInsider buying / sharesInsider selling / shares
HON0214,789
LMT098,228
RTN0141,364

Raytheon has also seen intensive insider selling during the last 30 days.

Conclusion

There have been four different insiders selling L-3 Communications and there have not been any insiders buying L-3 Communications during the last 30 days. Two of these four insiders decreased their holdings by more than 10%. L-3 Communications has an insider ownership of 0.64%.

Before going short L-3 Communications, I would like to get a bearish confirmation from the Point & Figure chart. The three main reasons for the proposed short entry are a relatively high PEG ratio, negative revenue growth, and the intensive insider-selling activity.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Source: L-3 Communications: 4 Different Insiders Have Sold Shares During The Last 30 Days