Harris Corp. (HRS) Hit By Low Revenues & Guidance

We issued an updated research report on Harris Corporation HRS on Aug 19.

Revenue Woes Continue in Q4

Harris Corporation reported lower-than-expected revenues in the fourth quarter of fiscal 2016. This was the fourth straight quarter in which the company’s top line missed the Zacks Consensus Estimate.

That the woes of the company are far from over is evident from its below-par guidance for fiscal 2017. The company expects earnings per share (on an adjusted basis) in the band of $5.70 to $5.90 for fiscal 2017. Following the disappointing guidance, the Zacks Consensus Estimate has been slashed 14 cents over the last 30 days to $5.79 per share. The company projects fiscal 2017 revenues in the band of $7.11 billion to $7.33 billion which is below the fiscal 2016 sales of $7.47 billion. The dreary view has caused the Zacks Consensus Estimate for revenues to be trimmed by $0.3 billion to $7.26 billion.

Foreign currency risks and economic slowdown in several major economies continue to hurt its top line. Weak energy markets have impacted the company's critical networks segment.  Additionally though we are optimistic on Harris Corporation’s growth by acquisition strategy, we note that all acquisitions have certain integration risks associated with them. Failure to successfully assimilate the newly acquired companies into its own business model may result in trouble for the Zacks Rank # 4 (Sell) company.

However, the company does have positives to look up to like the significant number of order wins and its efforts to reward its shareholders through dividends/buybacks.

Stocks to Consider

Better-ranked stocks in the broader Computer & Technology space include ARRIS International ARRS, Avid Technology, Inc AVID which sport a Zacks Rank #1 (Strong Buy), and j2 Global Inc. JCOM which carries a Zacks Rank #2 (Buy).

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