Reasonable Price-to-Earnings Ratio
Attractive Price-to-Sales Ratio
Healthy Gross Profit Margin
Decent Return on Equity
Low Debt Levels
Adequate Current Ratio
🏆 Strong Backlog and Revenue Growth
🔗 Strategic Partnerships
💰 Strong Free Cash Flow
📈 Solid Growth Guidance
🚀 Innovation and Transformation Initiatives
🌍 International Market Expansion
High EV/EBITDA Ratio
Moderate Price-to-Free Cash Flow Ratio
Net Profit Margin Below 10%
Low Quick Ratio
⚠️ Challenges in Space Programs
⚠️ Dependency on U.S. Government Contracts
Overall, L3Harris Technologies displays strong business quality with a solid backlog, strategic partnerships, and healthy cash flow. Future prospects are promising with growth guidance and innovation initiatives, although challenges in specific areas and dependency on government contracts present risks.
Analysis Date: January 30, 2025
Last Updated: March 12, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$99.02
Current Market Price: $200.05
IV/P Ratio: 0.49x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
-102.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for LHX
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (25.51)
P/B ratio ≤ 1.5 (1.96)
Current ratio ≥ 2.0 (1.08x)
Long-term debt < Net current assets (0.00x)
Margin of safety (-102.0%)
LHX does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
With a gross profit margin of 24.07%, the company demonstrates a solid capacity to generate profit from its sales, which is essential for covering operating expenses.
A return on equity of 7.90% indicates that the company is generating a reasonable return on shareholders' equity, suggesting effective management of capital.
The net profit margin of 7.04% is relatively low, indicating that the company retains less profit from its total revenues, which could signal potential inefficiencies.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
7.90%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
1.08%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
24.07%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
7.04%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
The debt-to-equity ratio of 0.06 suggests that the company is conservatively financed and has a minimal reliance on debt, which enhances financial stability.
With a current ratio of 1.08, the company maintains sufficient short-term assets to cover its short-term liabilities, indicating good liquidity.
A quick ratio of 0.90 indicates that the company may struggle to meet its short-term obligations without selling inventory, which could pose liquidity risks.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.06x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
1.08x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
L3Harris ended 2024 with a record backlog, which positions the company well for future revenue growth. The company reported revenue of $21.3 billion in 2024, up 10%, indicating robust demand for its products and services.
The company has formed strong partnerships, particularly in AI and autonomy, which enhance its ability to innovate and respond to evolving customer needs rapidly. Collaborations with Palantir and venture-backed startups underscore its commitment to adopting cutting-edge technologies.
L3Harris achieved free cash flow of $2.3 billion in 2024, growing by 14%. This indicates strong financial health and the ability to invest in growth opportunities.
The company is facing challenges with certain space programs that are nearing completion, which have resulted in negative EACs. This could affect future profitability if not managed properly.
For 2025, L3Harris expects revenue between $21.8 billion and $22.2 billion, indicating a stable growth trajectory. The company anticipates organic growth of 4% at the midpoint.
The LHX NeXt initiative aims to drive cost savings and operational efficiency, with a target of $1.2 billion in cumulative savings by the end of 2025. This will enhance margins and competitive positioning.
The company is focused on increasing its international presence, which has the potential to grow faster than domestic markets. This aligns with increasing defense budgets from allied nations.
L3Harris remains heavily reliant on U.S. government contracts, which could be impacted by changing policies and budget constraints under the new administration.