Value
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.6 |
| P/S | 8.8 |
| EV/EBITDA | 2.8 |
| Fwd P/E | 6.3 |
| PEG | 5.8 |
| Analyst target | 5.0 |
- ▸Forward P/E: 20.6x
- ▸PEG: 1.30
LHX · Why this verdict
Why L3Harris Technologies (LHX) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.5/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
L3Harris has posted four consecutive earnings beats with an average 8.3% surprise and the setup offers an approximately 2.9-to-1 reward-to-risk ratio with 13% upside to the take-profit level, but the stock currently trades below its rising long-term moving average in a technical distribution pattern, and 75% revenue exposure to a single customer creates sensitivity to defense budget developments.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
With 75% of revenue tied to a single customer, the business is highly sensitive to appropriations cycles, continuing resolutions, and defense budget negotiations — any of which could compress near-term order intake without warning. Bear case | The government share of revenue declines below 70% over the next two fiscal years as commercial or allied-nation sales grow, diversifying the revenue base. | ↓Deteriorating |
| CounterLong-term defense contracts are often embedded in multi-year programs with legally committed funding; the revenue base may be more predictable and durable than the concentration percentage alone implies. | ||
The company has beaten consensus EPS estimates in all four of the most recent quarters with surprises ranging from 3.6% to 13.0% and an average of 8.3%, demonstrating consistent ability to set achievable guidance and deliver above it. Earnings | The beat streak extends to six consecutive quarters with average quarterly surprise remaining above 6%. | ↓Deteriorating |
| CounterAll four beats occurred during a period of elevated defense-spending growth; if appropriations slow or continuing resolutions compress near-term orders, the guidance discipline may not be sufficient to maintain the streak. | ||
With 13% of headroom to the take-profit target and a reward-to-risk ratio of approximately 2.9-to-1, the asymmetry bar is cleared with a comfortable cushion — making this a setup where the geometry supports entry. Engine gate (passed) | Price advances toward the take-profit target over the next twelve months without testing the stop-loss floor, realizing the favorable asymmetry built into the setup. | →Stable |
| CounterThe stock currently trades below its long-term moving average with falling on-balance volume; if the technical weakness persists, the stop-loss level may be tested before any advance materializes, negating the favorable upside math. | ||
The stock trades below its 200-day moving average, but that average itself is still rising at 1.9% per thirty days — a configuration described as a pullback within a longer uptrend where the breakdown is not yet confirmed, even as on-balance volume moves into distribution. Momentum breakdown | The stock reclaims the 200-day moving average and on-balance volume turns accumulating within two quarters, resolving the current technical ambiguity in favor of the underlying trend. | ↑Improving |
| CounterDistribution in on-balance volume while trading below a long-term average can be an early warning of more significant deterioration; waiting for confirmation may cost meaningful ground if the trend does in fact roll over. | ||
With 75% of revenue tied to a single customer, the business is highly sensitive to appropriations cycles, continuing resolutions, and defense budget negotiations — any of which could compress near-term order intake without warning.
↓DeterioratingBear case
- Expectation
- The government share of revenue declines below 70% over the next two fiscal years as commercial or allied-nation sales grow, diversifying the revenue base.
CounterLong-term defense contracts are often embedded in multi-year programs with legally committed funding; the revenue base may be more predictable and durable than the concentration percentage alone implies.
The company has beaten consensus EPS estimates in all four of the most recent quarters with surprises ranging from 3.6% to 13.0% and an average of 8.3%, demonstrating consistent ability to set achievable guidance and deliver above it.
↓DeterioratingEarnings
- Expectation
- The beat streak extends to six consecutive quarters with average quarterly surprise remaining above 6%.
CounterAll four beats occurred during a period of elevated defense-spending growth; if appropriations slow or continuing resolutions compress near-term orders, the guidance discipline may not be sufficient to maintain the streak.
With 13% of headroom to the take-profit target and a reward-to-risk ratio of approximately 2.9-to-1, the asymmetry bar is cleared with a comfortable cushion — making this a setup where the geometry supports entry.
→StableEngine gate (passed)
- Expectation
- Price advances toward the take-profit target over the next twelve months without testing the stop-loss floor, realizing the favorable asymmetry built into the setup.
CounterThe stock currently trades below its long-term moving average with falling on-balance volume; if the technical weakness persists, the stop-loss level may be tested before any advance materializes, negating the favorable upside math.
The stock trades below its 200-day moving average, but that average itself is still rising at 1.9% per thirty days — a configuration described as a pullback within a longer uptrend where the breakdown is not yet confirmed, even as on-balance volume moves into distribution.
↑ImprovingMomentum breakdown
- Expectation
- The stock reclaims the 200-day moving average and on-balance volume turns accumulating within two quarters, resolving the current technical ambiguity in favor of the underlying trend.
CounterDistribution in on-balance volume while trading below a long-term average can be an early warning of more significant deterioration; waiting for confirmation may cost meaningful ground if the trend does in fact roll over.
Per-dimension breakdown
Quality
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.1 |
| ROA | 2.9 |
| Gross margin | 1.1 |
| Op margin | 5.0 |
| Net margin | 4.1 |
| Current ratio | 4.6 |
| FCF quality | 6.3 |
| Moat | 5.0 |
| Piotroski F | 7.8 |
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
6.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.6 |
| EPS growth | 7.7 |
Momentum
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 2.1 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 9.8 |
- ▸Overbought bear rally (RSI 83)
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -2.3%/30d — confirmed downtrend
Sentiment
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.5 |
| Analyst rating | 7.4 |
| Price target | 7.3 |
Insider
3.8/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 3.5 |
| notable moves | 3.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
4.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.1 |
| quality rank | 5.2 |
| growth rank | 1.8 |
Technical
2.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.5 |
| 52w position | 4.9 |
| gap | 5.0 |
Risk (lower is worse)
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.7 |
| days to cover | 8.1 |
| volatility | 6.8 |
| put call | 0.0 |
| implied vol | 6.6 |
| max pain risk | 3.0 |
| beta | 10.0 |
| debt equity | 7.8 |
- ▸Elevated put/call: 3.10
- ▸Above max pain $215
- ▸Concentration risks: 2 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| surprise avg | 6.6 |
| dividend safety | 5.8 |
| news activity | 6.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- MOMENTUM:7.6>=5.5
- INSIDER:OK
- EARNINGS_PROXIMITY:NO_DATE
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.3<1.5@spot
Warning (2)
- DEATH_CROSS:momentum=7.6>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.31
Upside
+4.6%
Downside
15.0%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 83
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 4.3 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Momentum at 7.6) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:0.3<1.5@spot) reinforce the read. Current asymmetry R:R is 0.31 — supplementary context, not the trigger for this path.
The strongest dimensions are Momentum at 7.6, Sentiment at 7.1, and Catalyst at 6.7; the weakest are Technical at 2.6, Insider at 3.8, and Quality at 4.4. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of 0.31 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Four Quarter Earnings Execution
Trip ifEPS surprise falls below 0% in any of the next 2 reported quarters.
- P2Favorable Risk Reward Meaningful Upside
Trip ifStock price declines more than 8% from current levels ($304.17), testing the stop-loss floor and invalidating the favorable reward-to-risk geometry.
- P3Us Government Customer Concentration
Trip ifU.S. Government revenue share falls below 65% of total revenue for 2 consecutive fiscal periods, indicating meaningful customer diversification.
- P4Pullback In Uptrend Not Confirmed
Trip ifStock price sustains above the 200-day moving average for 15 consecutive trading sessions while on-balance volume rises, confirming the uptrend is intact.