A Look at L3Harris Technologies’s Valuation Following Record Javelin Propulsion Contract Announcement

L3Harris Technologies (LHX) just landed a contract that is turning heads in the defense sector: a $292 million award to continue supplying propulsion for the Javelin weapon system. This is not just another order, but the largest propulsion production agreement the company has secured for the Javelin line. It locks in a five-year runway of steady work. The move puts a spotlight on L3Harris's manufacturing capabilities, especially with its fully digital workflow and a focused effort to ramp up rocket motor production across several programs. The timing is also notable. Shares of L3Harris have gained 24% in the past year, with momentum building as investors react to new contract wins and the opening of a new spacecraft manufacturing facility. While the company is expanding its capabilities into advanced aerospace and space systems, its long-term stock performance reflects steady gains. Returns over the past five years have kept pace with industry peers, and recent quarterly results show meaningful revenue and net income growth. With these developments and the recent share price increase, investors may be considering whether L3Harris is appealing based on its expanding contract portfolio or if the market has already factored in years of future growth.

Most Popular Narrative: 6.2% Undervalued

The most widely followed analyst narrative sees L3Harris Technologies as undervalued, with a fair value noticeably above the latest share price. Analysts cite strong momentum, sector tailwinds, and improved financial guidance as key ingredients in their outlook.

The extension of defense spending growth, driven by new mandatory funding approved via the Reconciliation bill and rising global threat levels, is seen as a key positive for top-line growth.

Curious what powers this upbeat valuation? The secret sauce lies in a series of bold financial expectations and margin shifts behind the analyst consensus. These details could change how you see L3Harris’s future. Wondering which assumptions sparked this under-the-radar price estimate? Uncover the surprising projections driving this fair value call.

Result: Fair Value of $302.58 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, reliance on external contractors and ongoing geopolitical tensions could challenge L3Harris’s ambitious growth assumptions. This reminds investors that risks remain in focus.

Find out about the key risks to this L3Harris Technologies narrative.

Another View: SWS DCF Model Adds Perspective

While the analyst consensus sees L3Harris as undervalued, our SWS DCF model offers another perspective. It also leans toward undervaluation, but it evaluates projected future cash flows rather than focusing on peer ratios. Can both approaches be correct about the company’s potential?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out L3Harris Technologies for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own L3Harris Technologies Narrative

If you think there is more to the story or want to dig into the numbers firsthand, you can shape your own outlook in just a few minutes. Do it your way.

A great starting point for your L3Harris Technologies research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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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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