Is It Too Late to Consider L3Harris After a 36% Surge in 2025?

• If you are wondering whether L3Harris Technologies is still worth buying after such a strong run, or if the upside has already been priced in, you are not alone. This is exactly what we are going to unpack here.
• The stock is up 36.4% year to date and 32.0% over the last year, even after a recent 2.3% dip over the past month that followed a 2.0% gain in the last week.
• Investors have been reacting to a steady drumbeat of defense contract wins and heightened geopolitical tensions, both of which tend to boost demand visibility for a contractor like L3Harris Technologies. At the same time, renewed focus on space, communications, and electronic warfare programs has strengthened the narrative that this is a long term beneficiary of elevated defense spending.
• Our initial take is that L3Harris scores a solid 4 out of 6 on our valuation checks, suggesting pockets of undervaluation even after the rally. Next we will walk through DCF, multiples, and other methods, before ending with a more nuanced way to judge what the stock might really be worth.

Find out why L3Harris Technologies's 32.0% return over the last year is lagging behind its peers.

Approach 1: L3Harris Technologies Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company is worth by projecting the cash it can generate in the future and then discounting those cash flows back to today in dollar terms.

For L3Harris Technologies, the model uses a 2 Stage Free Cash Flow to Equity approach. The company generated trailing twelve month free cash flow of about $1.85 billion, and analysts expect this to rise steadily as defense and space programs scale. Projections used in the model see free cash flow reaching roughly $3.05 billion by 2026 and about $4.55 billion by 2035, with analyst estimates for the nearer years and Simply Wall St extrapolations thereafter.

After discounting these future cash flows, the model arrives at an intrinsic value of about $382.33 per share. Compared with the current share price, this implies roughly a 26.0% discount, suggesting the market is not fully pricing in the projected cash generation.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests L3Harris Technologies is undervalued by 26.0%. Track this in your watchlist or portfolio, or discover 909 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for L3Harris Technologies.

Approach 2: L3Harris Technologies Price vs Earnings

For a profitable, established business like L3Harris Technologies, the price to earnings ratio is a useful yardstick because it links what investors are paying directly to the company’s current earnings power. In broad terms, faster growth and lower risk justify a higher normal PE multiple, while slower growth or elevated risk should pull that multiple down.

L3Harris currently trades on a PE of about 30.1x, which is below the Aerospace and Defense industry average of roughly 37.4x and also under the peer group average of about 33.6x. To move beyond simple comparisons, Simply Wall St calculates a Fair Ratio of 30.0x, which is the PE we would expect given L3Harris’ earnings growth profile, margins, industry, market cap and risk factors.

This Fair Ratio framework is more informative than headline peer or industry averages because it adjusts for company specific strengths and weaknesses rather than assuming all contractors deserve the same multiple. With the actual PE sitting almost exactly on the Fair Ratio, the market appears to be pricing L3Harris broadly in line with its fundamentals.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1463 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your L3Harris Technologies Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect your view of L3Harris Technologies’ future (its story) with a structured forecast for revenue, earnings and margins, and then a clear Fair Value that you can compare to today’s share price to help inform a decision to buy, hold or sell. On Simply Wall St’s Community page, millions of investors use Narratives as an easy, accessible tool to write down their assumptions, link them to a financial model, and see in real time how new information like earnings reports, contract wins or budget headlines dynamically updates that Fair Value. For example, one Narrative for L3Harris might lean bullish and assume sustained missile demand, higher margins and a Fair Value in the low to mid $350s. In contrast, a more cautious Narrative could focus on budget risks, fixed price contract pressures and a Fair Value closer to $250. The gap between those views helps you see where you sit and what has to go right or wrong for your thesis to play out.

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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