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

|
 |  About: L-3 Communications Holdings Inc. (LLL)
by: Markus Aarnio

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.

Name Title Trade Date Shares Sold Option Exercise & Sale Rule 10b5-1 Current Ownership Decrease In Ownership
John Mega SVP June 4 26,567 Yes No 12,414
shares
68.2%
Steve Kantor SVP June 2 29,512 Yes No 28,642 shares + 48,478 options 27.7%
Michael Strianese CEO May 14 60,000 Yes No 150,613
shares + 1,177,751 options
4.3%
Alan Washkowitz Director May 14 2,000 No No 36,505 shares + 19,046 options 3.5%
Click to enlarge

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.

Month Insider selling / shares Insider buying / shares
June 2014 56,079 0
May 2014 77,975 0
April 2014 0 0
March 2014 27,016 0
February 2014 380,165 0
January 2014 0 0
December 2013 0 0
November 2013 22,828 0
October 2013 120,085 0
September 2013 0 0
August 2013 233,382 0
July 2013 193,061 0
June 2013 0 0
May 2013 15,937 0
April 2013 8,099 0
March 2013 0 0
February 2013 102,478 0
January 2013 0 0
Click to enlarge

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
Click to enlarge

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

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.

Company LLL HON LMT RTN
Market Cap: 10.85B 74.33B 51.83B 30.18B
Employees: 48,000 131,000 115,000 63,000
Qtrly Rev Growth (yoy): -0.07 0.04 -0.04 -0.06
Revenue: 12.42B 39.41B 44.94B 23.34B
Gross Margin: 0.10 0.28 0.11 0.22
EBITDA: 1.50B 6.54B 5.62B 3.42B
Operating Margin: 0.10 0.14 0.11 0.13
Net Income: 765.00M 3.98B 3.12B 1.99B
EPS: 8.44 4.99 9.67 6.44
P/E: 14.90 19.02 17.01 14.98
PEG (5 yr expected): 3.55 1.66 1.72 1.22
P/S: 0.88 1.89 1.17 1.31
Click to enlarge

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

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

Company Insider buying / shares Insider selling / shares
HON 0 214,789
LMT 0 98,228
RTN 0 141,364
Click to enlarge

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.