Stock Analysis & Valuation L3Harris Technologies, Inc. (HRS.DE)

• Previous Close: €288.10
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, €	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method		n/a
Graham Formula	119.50	-59

Strategic Investment Analysis

Company Overview

L3Harris Technologies, Inc. (HRS.DE) is a leading global aerospace and defense technology innovator, providing advanced solutions across air, land, sea, space, and cyber domains. Headquartered in Melbourne, Florida, the company serves both government and commercial customers with a diversified portfolio of high-tech products and services. L3Harris operates through four key segments: Communication Systems, delivering tactical communications and public safety networks; Space and Intelligence Systems, offering Earth observation and intelligence analytics; Electronic Systems, specializing in electronic warfare and wireless technologies; and Critical Networks, providing managed services for air traffic management, maritime communications, and IT solutions. With a market capitalization of approximately €42.85 billion, L3Harris is a major player in the Industrials sector, particularly in Capital Goods. The company's commitment to innovation and agility positions it as a critical partner in defense and commercial technology markets worldwide.

Investment Summary

L3Harris Technologies presents a compelling investment case with its diversified portfolio in the high-growth aerospace and defense sectors. The company reported robust revenue of €19.42 billion in FY 2023, with net income of €1.23 billion and diluted EPS of €6.44. Its strong operating cash flow of €2.1 billion and a dividend yield supported by a €4.16 per share payout underscore financial stability. However, investors should note the company's significant total debt of €13.13 billion and a beta of 0.731, indicating moderate volatility relative to the market. The company's focus on innovation and government contracts provides steady revenue streams, but geopolitical risks and defense budget fluctuations could impact future performance.

Competitive Analysis

L3Harris Technologies competes in the highly specialized aerospace and defense industry, where technological superiority and government contracts are critical. The company's competitive advantage lies in its diversified product offerings across communication, space, electronic, and critical network systems, enabling it to serve a broad range of defense and commercial needs. Its strong R&D capabilities and strategic acquisitions, such as the merger with Harris Corporation in 2019, have bolstered its market position. However, L3Harris faces intense competition from larger defense contractors like Lockheed Martin and Northrop Grumman, which have greater scale and resources. The company's agility and focus on niche markets, such as electronic warfare and space intelligence, allow it to differentiate itself. Its reliance on U.S. government contracts (a significant portion of revenue) exposes it to budgetary risks, but its international presence and commercial segments provide diversification.

Major Competitors

• Lockheed Martin Corporation (LMT): Lockheed Martin is the largest defense contractor globally, with dominant positions in aerospace, missiles, and space systems. Its scale and long-term contracts with the U.S. government provide stability, but its size can lead to slower innovation cycles compared to L3Harris. Lockheed's F-35 program is a key revenue driver, but cost overruns have been a concern.
• Northrop Grumman Corporation (NOC): Northrop Grumman specializes in stealth technology, autonomous systems, and space solutions, competing directly with L3Harris in electronic warfare and intelligence. Its B-21 bomber and space systems are growth areas, but its reliance on classified programs limits transparency. Northrop's larger budget allows for more significant R&D investments.
• Raytheon Technologies Corporation (RTX): Raytheon Technologies is a leader in missile defense and avionics, with a strong commercial aerospace segment through Pratt & Whitney. Its merger with United Technologies expanded its portfolio, but integration challenges remain. Raytheon's global footprint is broader than L3Harris, but its commercial exposure adds cyclical risk.
• BAE Systems plc (BAES.L): BAE Systems is a major European defense contractor with strong naval and electronic warfare capabilities. Its international presence, particularly in the UK and Saudi Arabia, provides diversification, but geopolitical risks are higher. BAE's smaller U.S. market share compared to L3Harris limits its competitiveness in Pentagon contracts.