- If you are wondering whether L3Harris Technologies at around US$343 is still a sensible entry or hold, the key question is how that price compares with its underlying value.
- The stock has had a mixed short term performance, with a 2.8% decline over the last 7 days and a 0.6% return over 30 days. The year to date return sits at 12.7% and the 1 year return at 67.9%.
- Over 3 and 5 years, total returns of 85.9% and 86.2% respectively provide important context for anyone trying to understand how current expectations compare with the past. These figures can influence how much optimism or caution is already reflected in the current share price.
- Simply Wall St's valuation checks give L3Harris Technologies a score of 2 out of 6. It is therefore useful to look closely at how different valuation methods judge the stock today and then consider an even more complete way to think about value at the end of this article.
L3Harris Technologies scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: L3Harris Technologies Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model takes the cash L3Harris Technologies is expected to generate in the future and discounts those projections back to today to estimate what the business might be worth per share right now.
L3Harris Technologies reported last twelve months free cash flow of about $2.66b. Simply Wall St uses a 2 Stage Free Cash Flow to Equity model, combining analyst estimates and longer term extrapolations. For example, projected free cash flow reaches $3.00b in 2026 and $4.13b in 2030, with values between those years based on a mix of analyst inputs and modelled growth rates.
Bringing all those future cash flows back to today gives an estimated intrinsic value of about $452.17 per share. Compared with the current share price of around $343, this DCF output implies the stock is 24.1% undervalued on this measure.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests L3Harris Technologies is undervalued by 24.1%. Track this in your watchlist or portfolio, or discover 61 more high quality undervalued stocks.
Approach 2: L3Harris Technologies Price vs Earnings
For profitable companies like L3Harris Technologies, the P/E ratio is a straightforward way to relate what you pay per share to the earnings that support that price. It gives you a quick sense of how many years of current earnings the market is effectively pricing in.
What counts as a “normal” P/E often reflects how the market views a company’s growth prospects and risk. Higher expected growth or lower perceived risk can support a higher P/E, while slower growth or higher uncertainty usually calls for a lower multiple.
L3Harris Technologies currently trades on a P/E of 39.89x. That sits above both the Aerospace & Defense industry average of 35.69x and the peer average of 35.39x. Simply Wall St also calculates a Fair Ratio of 38.85x, which is the P/E that would typically be expected given factors such as earnings growth profile, industry, profit margins, market cap and key risks.
This Fair Ratio is more tailored than a simple comparison with peers or the broad industry because it looks at the specifics of L3Harris Technologies rather than treating all companies as similar. With the actual P/E of 39.89x only slightly above the Fair Ratio of 38.85x, the stock appears slightly expensive on this measure.
Result: OVERVALUED
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Upgrade Your Decision Making: Choose your L3Harris Technologies Narrative
Earlier it was mentioned that there is an even better way to understand valuation. Narratives are introduced here as a simple way for you to write the story behind your numbers by linking your view of L3Harris Technologies to a forecast for revenue, earnings and margins, and then to a fair value that you can compare with the current share price to help decide whether to buy or sell. All of this can be done within an easy tool on Simply Wall St's Community page that updates when new information such as earnings or news arrives. For example, one investor might plug in the highest analyst fair value of US$443.00 and build a story around strong demand for defense programs, while another might anchor on the lowest fair value of US$283.00 and focus on risks from fixed price contracts and budget constraints. This approach gives you a clear range of possible outcomes rather than a single static number.
Do you think there's more to the story for L3Harris Technologies? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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