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L3harris Technologies (LHX)
:LHX

L3Harris Technologies (LHX) AI Stock Analysis

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L3Harris Technologies

(NYSE:LHX)

76Outperform
L3Harris Technologies demonstrates solid financial fundamentals with strong revenue and profitability growth. The company's effective cost management and low financial leverage are key strengths. Despite the positive earnings call, challenges in specific segments and valuation concerns moderate the overall score.
Positive Factors
Cash Management
A significant portion of free cash flow was returned to shareholders through dividends and share buybacks, reflecting strong cash management.
Operational Efficiency
Sales per employee improved significantly, showing increased efficiency and productivity within the company.
Stock Repurchases
Proceeds from the sale of Commercial Aviation Solutions are expected to re-accelerate stock repurchases, with a baseline of $1 billion planned.
Negative Factors
International Sales
The percentage of revenue from international sales decreased slightly, which may suggest challenges in global market expansion.
Operating Margins
Segment operating margins are expected to decline, particularly for Aerojet, due to productivity issues.
Revenue Impact
The sale of Commercial Aviation Solutions (CAS) could lead to a $480 million reduction in revenue for 2025, impacting the company's revenue estimates.

L3Harris Technologies (LHX) vs. S&P 500 (SPY)

L3Harris Technologies Business Overview & Revenue Model

Company DescriptionL3Harris 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.
How the Company Makes MoneyL3Harris Technologies generates revenue primarily through the sale of its products and services to government and commercial customers worldwide. The company's revenue streams include contracts with the U.S. Department of Defense, international governments, and commercial clients. Significant revenue is derived from long-term contracts for integrated mission systems, such as intelligence, surveillance, and reconnaissance solutions, as well as command and control systems. The Communication Systems segment contributes through sales of tactical radios and broadband communication systems. The Space and Airborne Systems segment earns income from advanced sensors, payloads, and space-based technologies, while the Aviation Systems segment provides training, simulation, avionics, and air traffic management solutions. L3Harris also benefits from strategic partnerships and collaborations that enhance its technological capabilities and market reach.

L3Harris Technologies Financial Statement Overview

Summary
L3Harris Technologies exhibits strong financial performance with significant revenue growth, solid profitability, and robust cash generation. The company's low leverage and effective equity utilization provide stability. However, there is room for improvement in operating efficiency and aligning cash flow with reported earnings.
Income Statement
85
Very Positive
L3Harris Technologies demonstrates strong and consistent revenue growth, with a notable increase of 9.81% from 2023 to 2024. The company maintains a solid gross profit margin and has improved its net profit margin over the years, reflecting effective cost management and operational efficiency. However, a slight decrease in EBIT margin indicates some pressure on operating efficiency despite overall profitability.
Balance Sheet
80
Positive
The balance sheet shows a stable equity base with a Debt-to-Equity ratio of 0.06, indicating low financial leverage and a strong equity position. The Return on Equity is robust, showing the company's effective use of equity capital to generate profits. However, there is a slight decline in the equity ratio, suggesting a need to monitor the balance between liabilities and assets.
Cash Flow
78
Positive
The cash flow statement reflects healthy operating cash flow with a strong Free Cash Flow growth rate of 30.54% from 2023 to 2024. The Operating Cash Flow to Net Income ratio is favorable, indicating efficient cash generation relative to net income. Nonetheless, the Free Cash Flow to Net Income ratio suggests room for improvement in aligning cash flow with reported earnings.
Breakdown
Mar 2025Dec 2023Dec 2022Dec 2021Mar 2021
Income StatementTotal Revenue
21.32B19.42B17.06B17.81B18.19B
Gross Profit
5.52B5.11B4.93B5.38B5.31B
EBIT
1.92B1.43B2.37B2.56B2.39B
EBITDA
3.56B2.93B2.50B3.52B2.64B
Net Income Common Stockholders
1.50B1.23B1.06B1.85B1.12B
Balance SheetCash, Cash Equivalents and Short-Term Investments
615.00M560.00M880.00M941.00M1.28B
Total Assets
42.00B41.69B33.52B34.71B36.96B
Total Debt
1.16B13.95B7.79B7.83B7.69B
Net Debt
540.00M13.39B6.91B6.89B6.41B
Total Liabilities
22.42B22.86B14.90B15.39B16.12B
Stockholders Equity
19.51B18.77B18.52B19.21B20.72B
Cash FlowFree Cash Flow
2.15B1.65B1.91B2.35B2.42B
Operating Cash Flow
2.56B2.10B2.16B2.69B2.79B
Investing Cash Flow
-263.00M-7.02B-250.00M1.39B751.00M
Financing Cash Flow
-2.22B4.59B-1.95B-4.41B-3.11B

L3Harris Technologies Technical Analysis

Technical Analysis Sentiment
Negative
Last Price202.06
Price Trends
50DMA
207.89
Negative
100DMA
217.37
Negative
200DMA
224.57
Negative
Market Momentum
MACD
0.58
Positive
RSI
49.95
Neutral
STOCH
21.58
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LHX, the sentiment is Negative. The current price of 202.06 is below the 20-day moving average (MA) of 210.82, below the 50-day MA of 207.89, and below the 200-day MA of 224.57, indicating a bearish trend. The MACD of 0.58 indicates Positive momentum. The RSI at 49.95 is Neutral, neither overbought nor oversold. The STOCH value of 21.58 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LHX.

L3Harris Technologies Risk Analysis

L3Harris Technologies disclosed 28 risk factors in its most recent earnings report. L3Harris Technologies reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

L3Harris Technologies Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
NONOC
78
Outperform
$70.28B17.1327.75%1.70%4.44%110.33%
78
Outperform
$38.09B104.0319.10%33.32%111.64%
LHLHX
76
Outperform
$37.93B25.657.85%2.32%9.82%22.33%
GDGD
75
Outperform
$67.10B18.3417.44%2.27%12.88%13.78%
LMLMT
74
Outperform
$101.72B19.3781.04%2.98%5.14%-19.14%
TDTDG
68
Neutral
$69.42B43.67-29.16%16.89%20.33%
62
Neutral
$7.26B12.383.01%3.40%3.58%-14.13%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
LHX
L3Harris Technologies
202.06
-2.25
-1.10%
GD
General Dynamics
250.01
-37.31
-12.99%
LMT
Lockheed Martin
432.15
-8.67
-1.97%
NOC
Northrop Grumman
485.52
36.88
8.22%
AXON
Axon Enterprise
497.13
185.92
59.74%
TDG
Transdigm Group
1,237.85
69.74
5.97%

L3Harris Technologies Earnings Call Summary

Earnings Call Date: Jan 30, 2025 | % Change Since: -4.14% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a strong performance with record revenue and significant program wins, supported by effective cost-saving measures. However, challenges remain in specific segments, particularly space, and uncertainty around international aid programs.
Highlights
Record Revenue and Backlog
L3Harris achieved record revenue of $21.3 billion for 2024, growing 10% year-over-year, with a record backlog positioning the company well for the future.
Significant Program Wins
Notable achievements include winning the Next-Gen Jammer competition and a $1 billion IDIQ award for resilient communications for the U.S. Navy.
LHX NeXt Cost Savings
The LHX NeXt initiative exceeded its cost savings target, achieving $800 million in 2024, with expectations of $1.2 billion by the end of 2025, driving margin expansion.
Strong Free Cash Flow
Free cash flow grew to $2.3 billion in 2024, representing a 14% increase driven by earnings growth and effective working capital management.
Lowlights
Space Segment Challenges
The SAS segment saw revenue decline by 4% year-over-year due to the divestiture of the antenna business and challenges in fixed-price development programs in space.
Ukraine Aid Uncertainty
There is uncertainty regarding continued U.S. government assistance to Ukraine, potentially affecting tens of millions of dollars in backlog.
Fixed Price Development Program Risks
Legacy fixed price development programs, particularly in space, have posed challenges with negative adjustments totaling about $100 million in 2024.
Company Guidance
In the earnings call for the fourth quarter of 2024, L3Harris Technologies provided detailed guidance for 2025, projecting revenue between $21.8 billion and $22.2 billion, which represents an organic growth of 4% at the midpoint. Segment operating margin is expected to be in the mid to high 15% range, supported by cost savings from the LHX NeXt initiative and strong program execution. Free cash flow is anticipated to be between $2.4 billion and $2.5 billion. The company also outlined its expectation for non-GAAP EPS to be in the range of $10.55 to $10.85, reflecting a 10% growth at the midpoint. At the segment level, SAS revenue is projected to be $6.9 billion to $7.1 billion, IMS revenue is anticipated at $7 billion to $7.2 billion, CS revenue is expected to be $5.6 billion to $5.7 billion, and Aerojet Rocketdyne is forecasted to reach approximately $2.5 billion. Additionally, the company aims to repurchase at least $1 billion of shares in 2025 and plans to transfer approximately $1.2 billion in pension assets and liabilities to a third party by the end of the first quarter of 2025.

L3Harris Technologies Corporate Events

Private Placements and FinancingBusiness Operations and Strategy
L3Harris Technologies Secures New Credit Facilities
Neutral
Feb 21, 2025

On February 18, 2025, L3Harris Technologies announced the establishment of a new $2.5 billion five-year senior unsecured revolving credit facility, replacing a previous $2 billion facility. This move enhances L3Harris’ financial flexibility, allowing it to borrow, prepay, and re-borrow funds, with certain subsidiaries designated as borrowers. Concurrently, L3Harris set up a new $500 million 364-day credit facility, replacing a prior $1.5 billion facility. These developments demonstrate L3Harris’ strategic financial adjustments to support its operations and maintain favorable terms based on its senior debt ratings.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.