LHX

ACCE thesis

L3Harris builds mission-critical communications equipment, electronic warfare systems, and space technology for defense and intelligence customers worldwide. The company owns irreplaceable RF spectrum assets and legacy defense contracts that create switching costs measured in decades, not years. Management expects $2.2 billion in free cash flow for 2024, driven by Space & Airborne Systems segment margins expanding 200 basis points as production scales on classified programs. The forward PE of 25.8x looks reasonable given 85% of revenue comes from multi-year government contracts, and the Pentagon's $842 billion 2024 budget prioritizes exactly the electronic warfare and satellite communications L3Harris dominates. Trading at a 15% discount to peak 2021 multiples despite stronger fundamentals today.

• high
  Earnings decline amid growth

  Revenue surged +190% YoY but earnings fell -6.1%, suggesting margin pressure or integration costs eroding profitability.
• moderate
  Insider selling activity

  Insiders sold $5.86M with zero purchases in recent period, indicating potential lack of confidence at current levels.
• moderate
  Elevated valuation multiples

  P/E of 33.6x and EV/EBITDA of 34.4x appear stretched for defense sector, limiting margin of safety.

Snapshot