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L3Harris Technologies (LHX)
NYSE:LHX

L3Harris Technologies (LHX) AI Stock Analysis

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L3Harris Technologies

(NYSE:LHX)

Rating:76Outperform
Price Target:
$273.00
▲(12.78%Upside)
L3Harris Technologies' overall stock score is driven by its strong financial performance and positive technical indicators, suggesting a solid foundation and potential for growth. While the valuation suggests the stock may be overvalued, the company's strategic initiatives and positive earnings call sentiment provide a supportive outlook for sustained growth.
Positive Factors
Financial Strategy
Proceeds from the sale of Commercial Aviation Solutions are expected to re-accelerate stock repurchases, with a baseline of $1 billion planned.
Military Contracts and Investments
LHX capabilities in secure communications, space-based operations, and missile programs should continue to benefit from emphasis and investment by US and allied militaries.
Partnerships and Innovation
Developing partnerships with defense tech entrants is seen as an indicator of the company’s dedication to innovation and agility.
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 is expected to remove $480 million from L3Harris Technologies' 2025 revenue estimates.

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

L3Harris Technologies Business Overview & Revenue Model

Company DescriptionL3Harris Technologies (LHX) is a leading American technology company specializing in defense and aerospace systems. Formed from the merger of L3 Technologies and Harris Corporation in 2019, the company operates in various sectors including communication, electronic, and avionics systems. L3Harris provides advanced solutions for government, defense, and commercial customers worldwide, focusing on secure communications, electronic warfare, avionics, and space systems.
How the Company Makes MoneyL3Harris Technologies generates revenue primarily through the sale of its diverse portfolio of defense and aerospace products and services. The company earns income by fulfilling contracts with government agencies such as the U.S. Department of Defense and other allied nations, providing mission-critical systems and solutions. These include communication systems, avionics, and ISR (Intelligence, Surveillance, and Reconnaissance) systems. Additionally, L3Harris leverages technology development and system integration capabilities to offer innovative solutions that enhance military operations and commercial aviation. The company's revenue model is supported by long-term contracts, research and development investments, and strategic partnerships with other defense contractors and organizations that expand its reach and capabilities.

L3Harris Technologies Key Performance Indicators (KPIs)

Any
Any
Revenue by Segment
Revenue by Segment
Chart InsightsL3Harris Technologies' revenue growth in the Communication Systems segment is robust, driven by strong international demand and strategic partnerships, notably a $1.1 billion contract with the Dutch Ministry of Defense. However, the Space and Airborne Systems (SAS) segment faces challenges with a 6% organic revenue decline due to program timing and reduced F-35 volumes. Despite these hurdles, the company maintains a positive outlook, focusing on long-term growth and profitability, supported by strategic innovations and cost-saving initiatives.
Data provided by:Main Street Data

L3Harris Technologies Earnings Call Summary

Earnings Call Date:Apr 24, 2025
(Q1-2025)
|
% Change Since: 12.46%|
Next Earnings Date:Jul 24, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong international demand and strategic partnerships driving growth, alongside solid financial performance and margin expansion. However, challenges in the SAS segment, a free cash flow outflow, and budget constraints posed concerns. Despite these challenges, the overall sentiment was buoyant, with a focus on long-term growth and profitability.
Q1-2025 Updates
Positive Updates
Strong International Demand and Key Contract Wins
L3Harris secured a $1.1 billion contract with the Dutch Ministry of Defense for network modernization and software-defined radios. The company reported strong international demand, contributing to a 4% revenue growth in CES segment.
Positive Financial Performance in Q1 2025
Revenue was $5.1 billion, with a segment operating margin of 15.6%, marking the sixth consecutive quarter of year-over-year margin expansion. Non-GAAP EPS was $2.41, up 7% year-over-year.
Strategic Partnerships and Innovations
Announced new partnerships with Kuiper Government Solutions and Shield AI to enhance tactical communication and AI-enabled unmanned systems capabilities.
Continued Focus on Profitability
Maintained segment operating margin guidance of mid to high 15% for 2025 despite divestitures, supported by LHX NEXT cost savings and strong program execution.
Negative Updates
Challenges in SAS Segment
SAS revenue was down 6% organically, primarily due to lower volumes associated with program timing and reduced F-35 volume as TR3 mission computing hardware transitions from development to production.
Free Cash Flow Outflow
Free cash was an outflow of about $70 million in Q1 2025, although this was less than half the outflow seen in Q1 2024.
Potential Impact of Government Budget Constraints
Space sector faced government fiscal year 2025 budget constraints, expected to abate by 2026, impacting revenue growth in the short term.
Company Guidance
During the first quarter 2025 earnings call for L3Harris Technologies, the company updated its guidance for the year while expressing confidence in achieving its 2026 financial framework of $23 billion in revenue, low 16% margins, and $2.8 billion in free cash flow. The company reported a first-quarter revenue of $5.1 billion with a segment operating margin of 15.6% and a non-GAAP EPS of $2.41, reflecting a 7% year-over-year increase. Despite a free cash outflow of about $70 million due to the short quarter, L3Harris reiterated its 2025 free cash flow guidance of $2.4 to $2.5 billion. The guidance was adjusted to account for the commercial aviation solutions divestiture, with expected revenue now between $21.4 to $21.7 billion, representing a 4% organic growth at the midpoint. The company's operational performance and capital deployment actions, including a $1.2 billion pension obligation transfer, were highlighted as contributing factors to maintaining strong financial projections.

L3Harris Technologies Financial Statement Overview

Summary
L3Harris Technologies demonstrates strong financial health with robust profitability metrics and stable growth. A solid income statement with healthy margins, a stable balance sheet with low leverage, and strong cash flow conversion indicate efficient financial management. Overall, the financial performance suggests a resilient foundation for future growth.
Income Statement
85
Very Positive
L3Harris Technologies shows a strong financial performance with a solid gross profit margin of 25.1% and a net profit margin of 7.9% for TTM (Trailing-Twelve-Months). The revenue growth rate from the previous fiscal year to TTM is approximately 9.4%, indicating robust growth. EBIT and EBITDA margins are healthy at 9.9% and 15.8%, respectively, reflecting efficient core operations.
Balance Sheet
72
Positive
The company maintains a stable financial position with a debt-to-equity ratio of 0.067 for TTM, indicating low leverage. ROE stands at 8.8%, showcasing moderate profitability for shareholders. The equity ratio is 46.4%, highlighting a balanced capital structure with reasonable reliance on equity financing.
Cash Flow
78
Positive
Cash flow metrics are strong, with a free cash flow growth rate of 5.5% from the previous fiscal year to TTM. The operating cash flow to net income ratio of 1.56 indicates adequate cash generation relative to net earnings. Similarly, the free cash flow to net income ratio is 1.35, suggesting efficient conversion of profits into cash.
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
12.24B13.95B7.79B7.83B7.69B
Net Debt
11.62B13.39B6.91B6.89B6.41B
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
Positive
Last Price242.06
Price Trends
50DMA
221.19
Positive
100DMA
214.60
Positive
200DMA
223.30
Positive
Market Momentum
MACD
6.92
Negative
RSI
69.28
Neutral
STOCH
57.45
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LHX, the sentiment is Positive. The current price of 242.06 is above the 20-day moving average (MA) of 232.71, above the 50-day MA of 221.19, and above the 200-day MA of 223.30, indicating a bullish trend. The MACD of 6.92 indicates Negative momentum. The RSI at 69.28 is Neutral, neither overbought nor oversold. The STOCH value of 57.45 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (66)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
GDGD
79
Outperform
$74.09B19.1618.23%2.09%14.11%17.65%
LMLMT
77
Outperform
$112.50B20.7482.55%2.67%3.12%-15.29%
76
Outperform
$59.09B188.8015.13%32.48%24.29%
LHLHX
76
Outperform
$45.46B28.828.49%1.93%5.39%36.86%
TDTDG
75
Outperform
$81.78B48.92-29.16%14.90%17.50%
NONOC
74
Outperform
$70.27B19.2225.41%1.68%0.61%77.28%
66
Neutral
$4.49B12.285.32%248.53%4.08%-12.00%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
LHX
L3Harris Technologies
242.06
24.44
11.23%
GD
General Dynamics
274.42
-17.76
-6.08%
LMT
Lockheed Martin
478.03
21.45
4.70%
NOC
Northrop Grumman
488.12
51.02
11.67%
AXON
Axon Enterprise
788.36
509.21
182.41%
TDG
Transdigm Group
1,444.49
180.38
14.27%

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.