Intrinsic Value L3Harris Technologies, Inc. (0L3H.L)

• Previous Close: £342.70
• Intrinsic Value: £83.44
• Upside potential: -76%

Stock Valuation Context

Business Model And Market Position

L3Harris Technologies, Inc. operates as a leading aerospace and defense technology company, delivering mission-critical solutions to government and commercial clients globally. The company’s diversified portfolio spans four key segments: Integrated Mission Systems, Space and Airborne Systems, Communication Systems, and Aviation Systems. These segments provide advanced ISR systems, space payloads, tactical communications, and defense aviation products, positioning L3Harris as a key player in high-tech defense and aerospace solutions. Its expertise in electro-optical systems, unmanned platforms, and secure communications underscores its role in modern warfare and intelligence operations. The firm’s long-standing history, dating back to 1895, and strategic acquisitions, such as the merger with Harris Corporation, have solidified its market presence. L3Harris competes with giants like Lockheed Martin and Raytheon, differentiating itself through integrated multi-domain solutions and innovation in electronic warfare and cyber defense. Its strong government contracts and R&D focus ensure steady demand, though it faces cyclical risks tied to defense budgets. The company’s global footprint and technological edge make it a critical supplier for NATO allies and commercial aerospace partners.

Revenue Profitability And Efficiency

L3Harris reported revenue of $21.3 billion for FY 2025, with net income of $1.5 billion, reflecting a margin of approximately 7%. Operating cash flow stood at $2.6 billion, supported by disciplined cost management and stable defense contracts. Capital expenditures of $408 million indicate ongoing investments in R&D and modernization, aligning with its high-tech product offerings.

Earnings Power And Capital Efficiency

The company’s diluted EPS of $7.87 demonstrates its ability to generate earnings despite competitive pressures. Its capital efficiency is evident in its ability to fund innovation and dividends while maintaining leverage, though its debt-to-equity ratio warrants monitoring given its $12.2 billion total debt.

Balance Sheet And Financial Health

L3Harris holds $615 million in cash and equivalents, providing liquidity against its $12.2 billion debt load. The balance sheet reflects a leveraged but manageable position, typical for capital-intensive defense firms. Its interest coverage remains adequate, supported by predictable government contracts.

Growth Trends And Dividend Policy

Revenue growth is tied to defense spending cycles, with recent trends emphasizing ISR and space systems. The company’s $4.68 annual dividend per share signals a commitment to shareholder returns, yielding approximately 2.2% at current market cap levels.

Valuation And Market Expectations

With a market cap of $44.5 billion and a beta of 0.72, L3Harris is valued as a stable defense play. Investors likely price in steady cash flows from long-term contracts, though geopolitical risks and budget cuts could impact multiples.

Strategic Advantages And Outlook

L3Harris benefits from entrenched government relationships and technological leadership in niche defense segments. Its outlook hinges on sustained defense budgets and successful integration of R&D into next-gen systems. Cybersecurity and space remain key growth vectors.

Sources

Company filings, Bloomberg