• If you are wondering whether L3Harris Technologies at around US$307.83 is still offering value after a strong run, you are not alone. This article is built to help you frame that question clearly.
• The stock is down 2.3% over the past week, up 1.9% over the past month, up 1.1% year to date, up 28.1% over the past year, up 73.2% over three years and up 52.2% over five years, which raises fair questions about how much of the story is already in the price.
• Recent news flow around L3Harris has focused on its role in defense and space related programs, as well as continued attention on the broader Aerospace & Defense sector in light of ongoing geopolitical tensions. This mix of contract related headlines and sector interest helps explain why investors continue to reassess both the risk profile and growth potential of the stock.
• L3Harris currently has a value score of 5/6, which suggests many of our valuation checks see the stock as undervalued. Next up is a closer look at the usual valuation tools, alongside a more complete way to think about value that will be covered at the end of the article.

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

A Discounted Cash Flow model takes the cash that a company is expected to generate in the future and discounts it back to today, giving an estimate of what the business could be worth now.

For L3Harris Technologies, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections in $. The latest twelve month Free Cash Flow is about $2.59b. Analyst estimates and subsequent extrapolations project Free Cash Flow reaching $4.02b by 2030, with interim years, such as 2026 and 2027, sitting in the $2.98b to $3.16b range before the later extrapolated figures.

When all those future cash flows are discounted back, the estimated intrinsic value comes out at about $401.60 per share. Against a recent share price around $307.83, this implies the stock trades at roughly a 23.3% discount to that DCF estimate. This indicates that the market price is below this cash flow based valuation.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests L3Harris Technologies is undervalued by 23.3%. Track this in your watchlist or portfolio, or discover 49 more high quality undervalued stocks.

Approach 2: L3Harris Technologies Price vs Earnings

For a profitable company, the P/E ratio is a useful way to see how much you are paying for each dollar of earnings. It is the preferred multiple here. A higher or lower P/E often reflects what the market expects for future growth and how much risk investors are willing to accept for those earnings.

L3Harris Technologies currently trades on a P/E of 33.11x. That sits below the Aerospace & Defense industry average P/E of 39.61x and very close to the peer group average of 33.36x, which suggests the stock is broadly in line with similar companies on this simple measure.

Simply Wall St’s “Fair Ratio” for L3Harris is 31.51x. This is a proprietary estimate of what the P/E might be given factors such as the company’s earnings growth profile, profit margins, industry, market cap and key risks. Because it adjusts for these company specific features instead of using broad group averages, it can offer a more tailored view than a straight comparison with peers or the wider industry.

Compared with the Fair Ratio of 31.51x, the current P/E of 33.11x is moderately higher, which points to the stock looking slightly overvalued on this metric.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your L3Harris Technologies Narrative

Earlier there was mention of an even better way to think about valuation. This is where Narratives come in, letting you spell out your story for L3Harris Technologies, link that story to a forecast for revenue, earnings and margins, and then connect it to a fair value that you can compare with the current price inside Simply Wall St’s Community page, where millions of investors share views. For example, if one investor builds a Narrative around the higher analyst target of about US$443 and another anchors on the lower US$300 view, each can clearly see how their assumptions differ, watch their fair values update automatically as new earnings or news arrive, and use that evolving gap between Fair Value and Price to decide whether the stock looks interesting, fully priced or less attractive to them.

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.