• If you are wondering whether L3Harris Technologies is offering fair value at its current share price, the key is to look past headlines and focus on how the stock stacks up across several valuation checks.
• The stock last closed at US$293.77, with the share price down 5.4% over the past week and 5.8% over the past month, while still showing a 21.0% return over the past year and 61.0% over three years.
• Recent attention on L3Harris Technologies has included ongoing coverage of its role within the aerospace and defense sector, alongside investor interest in how large contractors are positioned in current defense spending trends. Headlines around contract activity and sector sentiment provide a backdrop for the recent share price moves and set the scene for a closer look at value.
• On Simply Wall St's checks, L3Harris Technologies currently has a valuation score of 4/6. This will be unpacked through methods like P/E comparisons and discounted cash flow later in this article, before finishing with a broader way to think about valuation beyond any single model.

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

A Discounted Cash Flow model estimates what L3Harris Technologies could be worth today by projecting future cash flows and discounting them back to the present using a required return. It focuses on the cash the company is expected to generate for shareholders, rather than short term market moves.

For L3Harris Technologies, the 2 Stage Free Cash Flow to Equity model starts with last twelve months free cash flow of about $2.59b, then uses analyst forecasts and longer term extrapolations from Simply Wall St’s model. The projections include free cash flow of about $2.98b in 2026 and $4.02b in 2030, all in $. These projected figures are discounted to reflect the time value of money, then summed to reach an estimated intrinsic value per share.

On this basis, the DCF model suggests an intrinsic value of roughly $401.03 per share, compared with the recent share price of $293.77. The model output indicates the stock may be trading at an estimated 26.7% discount to this cash flow based valuation.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests L3Harris Technologies is undervalued by 26.7%. Track this in your watchlist or portfolio, or discover 44 more high quality undervalued stocks.

Approach 2: L3Harris Technologies Price vs Earnings

For a profitable business like L3Harris Technologies, the P/E ratio is a useful way to think about what you are paying for each dollar of current earnings. It helps you compare the stock with other companies and with the broader aerospace and defense sector using a common yardstick.

What counts as a “normal” P/E depends on how the market views a company’s growth prospects and risk. Higher expected earnings growth or lower perceived risk can support a higher P/E, while slower growth or higher risk tends to justify a lower multiple.

L3Harris Technologies currently trades on a P/E of 31.6x. This sits below the aerospace and defense industry average of about 40.2x, but above the peer group average of around 26.8x. Simply Wall St’s “Fair Ratio” for L3Harris Technologies is 31.5x. This is a proprietary estimate of the P/E that might be reasonable given factors such as earnings growth, profit margin, industry, market cap and key risks. Because it blends these company specific inputs, the Fair Ratio aims to be more tailored than a simple comparison with peers or sector averages. With the current P/E of 31.6x very close to the Fair Ratio of 31.5x, the stock appears priced at roughly a fair level on this metric.

Result: ABOUT RIGHT

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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. On Simply Wall St’s Community page you can use Narratives, which let you set out your own story for L3Harris Technologies by linking what you think about its contracts, space and missile exposure, margins and risks to a specific forecast for future revenue, earnings and profit margins. The tool then converts this into a Fair Value that you can compare with the current share price so you can judge whether the stock looks attractive or expensive to you. Each Narrative updates automatically as fresh news or earnings arrive, and different investors often land far apart. For example, one Narrative for L3Harris Technologies might lean closer to the higher US$443 price target while another sits near the lower US$300 view, reflecting how different assumptions about future performance lead to different Fair Values, all within a single, easy to use framework.

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.