top of page

Is L3harris Technologies a buy?

It’s time to breakdown another aerospace and defense name. Here is the breakdown on $LHX, otherwise known as L3harris Technologies.

Current Price: $196.15

52/Wk High: $209.77

52/Wk Low: $142.01

Market Cap: $41.1 Billion

Dividend: $1.02 / 2.06% Yield

Read below for the breakdown!

L3harris Technologies ($LHX) is a major aerospace and defense technologies company that provides customers with systems, services, and products for commercial and civil government applications.

Key business segments of L3harris Technologies include Communication Systems, Space and Intelligence Systems, and Electronic Systems.

In recent months, L3harris stock has been mostly flat, rising 6.54% in the past three months along with the rest of the aerospace names as the sector has seen inflows in recent months.

Shifting into the numbers, L3harris beat expectations for Q4, delivering a $3.14 EPS which was much better than the analyst’s EPS consensus estimate of $3.09.

As for revenues, L3harris reported a Q4 2020 revenues level of $4.7 billion, representing a 3.6% downside when compared to just a year prior.

Breaking down revenue by segment, Integrated Mission Systems turned out revenues of $1.465 billion, representing a 0.1% decline.

While the Integrated Mission Systems segment experienced a decline the Space and Airborne Systems segment turned out revenues of $1.256 billion, representing a 4.3% jump.

Finally, Communication Systems revenues totaled $1.143 billion (up 2.1%) while the Aviation Systems segment turned out revenues of $845 million (down 22%).

Furthermore, net income declined by 54% to $184 million along with net income margin which dropped to 3.9% from 8.3%.

Rounding out the quarter management reported a Q4 operating cash flow of $698 million and an adjusted free cash flow of $642 million.

Shifting into the full year, L3harris reported revenues of $18.2 billion, representing a 42% jump in revenues for FY 2020.

As for net income, leadership reported an FY 2020 net income of $1.086 billion representing a 19% drop in net income. Rounding out income on the full year, net income margin totaled 6%, down from 10.5% in FY 2019.

Shifting into the balance sheet, the numbers are solid.

Total Debt: $6.918 Billion

Total Liabilities: $16.236 Billion

Total Assets: $36.960 Billion

Cash & Short Term Inv: $1.276 Billion

On a valuation basis, L3harris does trade at a premium.

Price to Earnings: 38.16x

Forward Price to Earnings: 13.59x

Price to Sales: 2.24x

Price to Book: 1.99x

Price to Cash Flow: 22.66x

Management has been effective.

Return on Equity: 5.18%

Return on Assets: 2.89%

Return on Invested Capital: 3.26%

Given the numbers, the analysts are bullish with a mean price target of $215.13/share, representing a 9.68% upside.

It is also important to note that the high price target is $230.00/share, representing a 17.26% upside, while the low price target is $200.00/share, representing a 1.96% gain.

The big money is quite involved as well, with 78.34% of L3harris being owned by institutions. Top holders include The Vanguard Group, BlackRock Institutional Trust, and State Street Global Advisors.

On a technical basis, L3harris is solid. According to the six-month charts, the MACD is moving to the upside with significant momentum within a range of 2.85 down to 2.03.

The six-month charts are also indicating an RSI of 60.88 and CCI of 136.35, both of which are on the high end.

In short, L3harris is a solid company that has seen setbacks due to COVID-19 but continues to show its resilience and why it’s a strong long-term investment.


Disclaimer: This is not direct financial advice, simply an opinion based on independent research.

bottom of page