• If you are wondering whether L3Harris Technologies stock still offers value at around US$304.17, this article walks through what the current price might be implying about the business.
• The stock recently closed at US$304.17, with returns of 0.7% over the past week, 0.3% over the past month, a slight decline of 0.1% year to date, 24.8% over 1 year, 65.0% over 3 years, and 50.9% over 5 years.
• Recent headlines around L3Harris Technologies have focused on its role as a large U.S. defense contractor and on investor interest in companies with exposure to long term government and aerospace spending. These themes provide useful context when thinking about how the market has been treating the stock price over different time frames.
• On Simply Wall St's valuation checks, L3Harris Technologies scores 5 out of 6. This raises the question of how traditional valuation tools compare with a more narrative driven view of the stock that will be discussed at the end of this article.

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

A Discounted Cash Flow model estimates what L3Harris Technologies stock might be worth by projecting future cash flows and discounting them back to today using a required rate of return. It focuses on the cash the company could return to shareholders rather than short term earnings swings.

For L3Harris Technologies, the latest twelve month Free Cash Flow is about $2.59b. Analysts and Simply Wall St projections suggest Free Cash Flow could reach about $4.02b in 2030, with estimates provided for the next few years and then extrapolated out to 2035 using a 2 Stage Free Cash Flow to Equity approach. Each of these future cash flows, such as the projected $2.98b in 2026 and $3.16b in 2027, is discounted back into today’s dollars.

On this basis, the DCF model points to an estimated intrinsic value of about $406.75 per share. Compared with the recent share price of $304.17, the model implies L3Harris Technologies is around 25.2% undervalued according to these cash flow assumptions.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests L3Harris Technologies is undervalued by 25.2%. Track this in your watchlist or portfolio, or discover 47 more high quality undervalued stocks.

Approach 2: L3Harris Technologies Price vs Earnings

For a profitable company like L3Harris Technologies, the P/E ratio is a commonly used yardstick because it links what you pay for the stock directly to the earnings it is currently generating. Investors typically accept a higher or lower P/E depending on how they view a company’s growth prospects and the risks around those earnings.

L3Harris Technologies currently trades on a P/E of about 32.7x. This sits below the broader Aerospace & Defense industry average of around 39.5x and slightly below a peer group average of about 34.3x. On the surface, that suggests the stock is priced more cautiously than many sector peers.

Simply Wall St’s Fair Ratio for L3Harris Technologies is 31.5x. This is a proprietary estimate of what a reasonable P/E might be for the company after considering factors such as its earnings growth profile, profit margins, industry, market value and risk characteristics. Because it is tailored to the company rather than based on broad sector comparisons, the Fair Ratio can be more informative than a simple peer or industry check. With the current P/E of 32.7x sitting modestly above the Fair Ratio of 31.5x, the multiple points to the stock being slightly overvalued on this measure.

Result: OVERVALUED

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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, so Narratives bring that to life by letting you connect your view of L3Harris Technologies, including assumptions about future revenue, earnings and margins, to a financial forecast and then to a fair value that can be compared directly to the current share price. A Narrative is simply your story for why the company might perform a certain way, translated into numbers inside Simply Wall St’s Community page, which is used by millions of investors and updates as new information such as news or earnings is added. This makes Narratives an accessible tool for deciding whether L3Harris Technologies stock looks attractive or expensive at any point in time, because you can see how your fair value estimate sits against today’s price and how that changes as the data refreshes. For example, one investor might set a relatively high fair value for L3Harris Technologies based on confident long term contract assumptions, while another might choose a much lower fair value that reflects more cautious expectations for future defense spending.

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.