Echostar (SATS) versus L3 Technologies (LLL) Critical Survey

L3 Technologies (NYSE: LLL) and Echostar (NASDAQ:SATS) are both aerospace companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, risk, earnings, profitability, valuation and dividends.

Dividends

L3 Technologies pays an annual dividend of $3.20 per share and has a dividend yield of 1.6%. Echostar does not pay a dividend. L3 Technologies pays out 37.8% of its earnings in the form of a dividend. L3 Technologies has increased its dividend for 14 consecutive years.

Earnings and Valuation

This table compares L3 Technologies and Echostar’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
L3 Technologies $9.57 billion 1.59 $677.00 million $8.47 22.90
Echostar $1.89 billion 2.59 $392.56 million $0.84 60.65

L3 Technologies has higher revenue and earnings than Echostar. L3 Technologies is trading at a lower price-to-earnings ratio than Echostar, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

L3 Technologies has a beta of 1.22, meaning that its share price is 22% more volatile than the S&P 500. Comparatively, Echostar has a beta of 0.82, meaning that its share price is 18% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for L3 Technologies and Echostar, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
L3 Technologies 0 2 8 1 2.91
Echostar 0 1 1 0 2.50

L3 Technologies presently has a consensus price target of $224.56, suggesting a potential upside of 15.78%. Echostar has a consensus price target of $73.00, suggesting a potential upside of 43.28%. Given Echostar’s higher probable upside, analysts clearly believe Echostar is more favorable than L3 Technologies.

Profitability

This table compares L3 Technologies and Echostar’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
L3 Technologies 6.94% 13.74% 5.60%
Echostar 17.06% 1.61% 0.74%

Insider & Institutional Ownership

78.5% of L3 Technologies shares are owned by institutional investors. Comparatively, 46.2% of Echostar shares are owned by institutional investors. 2.9% of L3 Technologies shares are owned by insiders. Comparatively, 73.5% of Echostar shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

L3 Technologies beats Echostar on 12 of the 18 factors compared between the two stocks.

About L3 Technologies

L3 Technologies, Inc. provides aerospace systems, communication, electronic, and sensor systems used on military, homeland security, and commercial platforms in the United States and internationally. It offers simulation and training, night vision and image intensification equipment, and security and detection systems; and components, products, subsystems, and systems, as well as related services to military and commercial customers in various business areas, such as total training solutions, power and propulsion systems, aviation products, precision engagement systems, and security and detection systems. The company also provides fleet management support services, procurement, systems integration, sensor development, modifications, and periodic depot maintenance services; modernization and life extension maintenance upgrade and support services; aircraft fabrication and assembly of fixed and rotary wing aero structures, as well as avionics hardware and software systems; and prime mission systems integration and sensor development services. In addition, it offers network and communication systems, secure communications products, radio frequency components, satellite communication terminals and space, microwave and telemetry products, and secure data links. Further, the company provides multi-domain intelligence, surveillance, and reconnaissance mission solutions in various business areas, including space and sensor, airborne sensor, warrior sensor, maritime sensor, and intelligence and mission systems, as well as in advanced programs. It serves the United States (U.S.) Department of Defense and its prime contractors, the U.S. Government intelligence agencies, the U.S. Department of Homeland Security, foreign governments, and commercial customers. The company was formerly known as L-3 Communications Holdings, Inc. and changed its name to L3 Technologies, Inc. in December 2016. L3 Technologies, Inc. was founded in 1997 and is headquartered in New York, New York.

About Echostar

EchoStar Corporation provides satellite service operations and video delivery solutions worldwide. It operates in two segments, Hughes and EchoStar Satellite Services. The Hughes segments offers broadband satellite technologies and Internet services for home and small office customers; and broadband network technologies, managed services, equipment, hardware, satellite services, and communication solutions for aeronautical, enterprise, and government customers, as well as consumers. This segment also designs, provides, and installs gateways and terminal equipment for other satellite systems; and provides satellite ground segment systems and terminals to mobile system operators. The EchoStar Satellite Services segment offers satellite service operations and video delivery solutions on a full-time and occasional-use basis primarily to corporates, the United States government service providers, Internet service providers, broadcast news organizations, programmers, and private enterprise customers. As of December 31, 2017, the company operated through a fleet of 19 owned and leased in-orbit satellites. EchoStar Corporation was founded in 2007 and is headquartered in Englewood, Colorado.

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