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1. Company Snapshot

1.a. Company Description

L3Harris Technologies, Inc., an aerospace and defense technology company, provides mission-critical solutions for government and commercial customers worldwide.The company's Integrated Mission Systems segment provides multi-mission intelligence, surveillance, and reconnaissance (ISR) systems; and communication systems, as well as fleet management support, sensor development, modification, and periodic depot maintenance services for ISR and airborne missions.It also manufactures and integrates mission systems for maritime platforms, such as signals intelligence and multi-intelligence platforms; unmanned surface and undersea autonomous solutions; and power and ship control systems and other electronic and electrical products and systems.


In addition, this segment offers advanced electro-optical and infrared solutions.Its Space and Airborne Systems segment offers space payloads, sensors, and full-mission solutions; classified intelligence and cyber defense solutions; mission avionics; and electronic warfare systems.The company's Communication Systems segment provides tactical communications; broadband secured mobile networked communication equipment, including airborne, space, and surface data link terminals, ground stations, and transportable tactical satellite communication (SATCOM) systems for use in manned aircraft, unmanned aerial vehicles, and naval ships; and helmet and weapon mounted integrated night vision systems.


This segment also offers radios, systems applications, and equipment for critical public safety and professional communications; and SATCOM terminals and battlefield management networks.Its Aviation Systems segment offers defense aviation products; commercial pilot training; and mission networks solutions for air traffic management.The company was formerly known as Harris Corporation and changed its name to L3Harris Technologies, Inc.


in June 2019.L3Harris Technologies, Inc.was founded in 1895 and is headquartered in Melbourne, Florida.

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1.b. Last Insights on LHX

L3Harris Technologies, Inc. benefits from a favorable business environment, with rising global air travel and increased defense spending driving growth in the aerospace-defense sector. A proposed $1.5 trillion defense budget by Trump is expected to boost the company's prospects. Additionally, the company's defense segment is likely to gain from increased scrutiny on defense contractors, with CEOs' base salaries to be capped if contractors fail to perform. The crisis in the Caribbean and military operations in Venezuela may also drive demand for L3Harris' solutions.

1.c. Company Highlights

2. L3Harris Technologies: Strong Demand and Record Order Book Drive Sustained Growth

L3Harris Technologies reported a robust financial performance, with revenue reaching $21.9 billion, up 5% organically, and adjusted segment operating margin of 15.8%, up 40 basis points. Non-GAAP EPS was $10.73, an increase of 11% over 2024. The company's adjusted free cash flow grew to $2.8 billion, up over 20%. The actual EPS beat analyst estimates, with a reported EPS of $10.73, while the revenue was in line with expectations. The company's book-to-bill ratio was 1.3, and the backlog stood at over $38 billion, positioning L3Harris for sustained growth.

Publication Date: Feb -02

📋 Highlights

Missile Solutions Business IPO and Growth Prospects

The company is pursuing an initial public offering (IPO) of its missile solutions business in 2026, with the Department of War as a majority investor. The business is expected to grow at a double-digit CAGR, with potential long-term agreements similar to those announced for PAC-3 and THAAD. L3Harris has been investing in modernizing production lines for these programs and plans to scale across all munitions acceleration programs.

Outlook and Guidance

L3Harris expects 2026 revenue of $23 to $23.5 billion, representing organic growth of 7%, and segment operating margin of low 16%. Free cash flow is expected to be $3 billion, driven by growth, higher profitability, and disciplined working capital management. The company plans to invest $600 million in CapEx in 2026, a 35-40% increase from 2025, to modernize solid rocket motor production and support customer needs.

Valuation and Metrics

With a P/E Ratio of 39.92 and an EV/EBITDA of 20.57, the market is pricing in significant growth expectations for L3Harris. The company's ROE is 8.28%, indicating a relatively healthy return on equity. The Free Cash Flow Yield is 4.18%, suggesting a reasonable valuation. Analysts estimate next year's revenue growth at 6.9%, which is slightly lower than the company's expected organic growth of 7%.

Segment Performance and Growth Drivers

The Commercial and Defense Segment (CSD) business reported a healthy margin of 25%, and the company believes its model allows for potential margin expansion. L3Harris has a unique business model with traditional prime business models, commercial business models, and the high-growth top-line MSL. The company's space business is seeing significant growth, with a $4 billion-plus entity focused on solid rocket motors, seekers, and other missile-related capabilities.

3. NewsRoom

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Gold, Copper, and Missiles: 3 Big Dividend Raises After a Breakout Year

Feb -02

Source: marketbeat.com

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The New World Order Isn't A Theory - It's How I'm Investing

Jan -24

Source: seekingalpha.com

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3 Aerospace-Defense Stocks to Watch as Defense Spending Ramps Up

Jan -20

Source: zacks.com

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Defense CEOs Get Paid a Lot. Trump Is Pushing Them to Deliver.

Jan -09

Source: barrons.com

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Trump's $1.5 Trillion Defense Budget Is A Huge Gift To My Portfolio

Jan -09

Source: seekingalpha.com

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Crisis in the Caribbean: The Defense Sector Playbook

Jan -07

Source: marketbeat.com

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My Most Important Warning To Dividend Investors For 2026

Jan -03

Source: seekingalpha.com

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Trump plans financial restrictions on late, overbudget defense contractors, sources say

Dec -17

Source: reuters.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.50%)

6. Segments

Space & Airborne Systems

Expected Growth: 1.5%

As a leading provider of space and airborne systems, this segment is expected to maintain its growth pace, driven by continued investments in space exploration and national security.

Integrated Mission Systems

Expected Growth: 1.7%

With the increasing importance of ISR and cybersecurity, this segment is expected to experience higher growth, driven by government investments in these areas.

Aerojet Rocketdyne

Expected Growth: 1.3%

While Aerojet Rocketdyne is a key player in the propulsion systems market, its revenue is expected to grow at a slightly slower pace, due to the competitive landscape and budget constraints in the space and defense industries.

Communication Systems

Expected Growth: None%

None

Corporate Eliminations

Expected Growth: 0.0%

As a consolidation of intercompany transactions, this segment is not expected to experience any growth or decline.

7. Detailed Products

Aviation Systems

L3Harris Technologies provides a range of aviation systems, including communication systems, navigation systems, and surveillance systems for military and commercial aircraft.

C6ISR Systems

L3Harris Technologies offers a range of C6ISR (Command, Control, Communications, Computers, Cyber-Effects, and Intelligence, Surveillance, and Reconnaissance) systems for military and government agencies.

Electronic Systems

L3Harris Technologies provides electronic systems, including electronic warfare, night vision, and communication systems for military and defense applications.

Geospatial Solutions

L3Harris Technologies offers geospatial solutions, including satellite imaging, mapping, and analytics for government and commercial customers.

Mission Networks

L3Harris Technologies provides mission networks, including communication networks, data links, and satellite communications for military and government agencies.

Space and Airborne Systems

L3Harris Technologies offers space and airborne systems, including satellites, payloads, and sensors for government and commercial customers.

Training and Simulation

L3Harris Technologies provides training and simulation solutions, including flight simulators, ground simulators, and virtual training systems for military and commercial customers.

8. L3Harris Technologies, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

L3Harris Technologies, Inc. operates in a niche market with high barriers to entry, reducing the threat of substitutes. However, the company's products and services can be substituted with those of its competitors, posing a moderate threat.

Bargaining Power Of Customers

L3Harris Technologies, Inc. has a diverse customer base, including government agencies and commercial customers. The company's customers have limited bargaining power due to the specialized nature of its products and services.

Bargaining Power Of Suppliers

L3Harris Technologies, Inc. relies on a network of suppliers for components and materials. While the company has some bargaining power due to its size and scale, suppliers may still exert some pressure on prices and delivery terms.

Threat Of New Entrants

The defense and aerospace industry has high barriers to entry, including significant capital requirements and regulatory hurdles. New entrants would face significant challenges in competing with established players like L3Harris Technologies, Inc.

Intensity Of Rivalry

The defense and aerospace industry is highly competitive, with several established players competing for contracts and market share. L3Harris Technologies, Inc. faces intense rivalry from companies like Lockheed Martin, Boeing, and Raytheon Technologies.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 40.93%
Debt Cost 3.97%
Equity Weight 59.07%
Equity Cost 7.13%
WACC 5.83%
Leverage 69.29%

11. Quality Control: L3Harris Technologies, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Northrop Grumman

A-Score: 6.2/10

Value: 3.6

Growth: 5.9

Quality: 6.4

Yield: 3.0

Momentum: 9.0

Volatility: 9.0

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L3Harris

A-Score: 6.0/10

Value: 2.8

Growth: 5.6

Quality: 5.4

Yield: 4.0

Momentum: 8.5

Volatility: 9.7

1-Year Total Return ->

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Raytheon Technologies

A-Score: 5.5/10

Value: 2.3

Growth: 3.4

Quality: 5.0

Yield: 4.0

Momentum: 9.5

Volatility: 8.7

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HEICO

A-Score: 5.4/10

Value: 0.4

Growth: 8.4

Quality: 6.9

Yield: 0.0

Momentum: 8.0

Volatility: 8.3

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Lockheed Martin

A-Score: 5.1/10

Value: 2.8

Growth: 5.1

Quality: 4.5

Yield: 6.0

Momentum: 3.0

Volatility: 9.3

1-Year Total Return ->

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GE

A-Score: 4.8/10

Value: 0.7

Growth: 3.4

Quality: 6.8

Yield: 0.0

Momentum: 9.5

Volatility: 8.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

347.56$

Current Price

347.56$

Potential

-0.00%

Expected Cash-Flows