L3Harris Technologies (LHX) has outlined an expansion of more than US$1 billion for its solid rocket motor operations in Virginia. The company is creating the Virginia Advanced Propulsion Facilities to support multiple Department of War programs and to expand manufacturing capacity.

At a share price of US$320.46, L3Harris has seen a 1-day share price return of 0.93% but a 90-day share price return decline of 11.12%. Its 1-year total shareholder return of 49% and 3-year total shareholder return of 75.06% point to stronger longer term momentum that recent pullbacks have not fully reversed.

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With L3Harris reporting revenue of US$21.9b and net income of US$1.6b, plus an indicated intrinsic discount of about 28%, the key question is whether this pullback signals mispricing or if the market is already factoring in future growth.

Most Popular Narrative: 18.3% Undervalued

With L3Harris closing at $320.46 against a narrative fair value of $392.16, the current setup centers on whether long term defense and space goals justify that gap.

The U.S. defense budget is expected to grow, with new defense initiatives and a potential increase in funding that could benefit L3Harris, supporting revenue growth. L3Harris is well-positioned in several key growth areas, such as missile warning and tracking, due to recent investments and capability alignment, likely increasing future revenue.

Investors may be curious what earnings path and margin profile sit behind this valuation gap. The narrative focuses on sustained revenue expansion, rising profitability and a higher long term earnings base.

Result: Fair Value of $392.16 (UNDERVALUED)

However, there is still meaningful execution risk, especially if fixed price contracts or delays on major defense programs pressure margins and push the 2028 earnings path off course.

Another View: Multiples Point To A Richer Price Tag

While the narrative fair value suggests upside, the current P/E of 37.3x sits above the US Aerospace & Defense average of 36x, the peer average of 34.6x, and a fair ratio of 33x. That gap implies investors are already paying a premium, so the remaining margin for error may be limited.

Next Steps

Mixed views like these can be useful only if you pressure test them against the data yourself. Take a moment to weigh the company’s 5 key rewards and 2 important warning signs

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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.