L3Harris Technologies, Inc.
LHX · NYSE
LHX · NYSE
Expected to report Jan 28, 2027 — estimated from last year’s reporting date.
Consensus is $3.15 EPS for Dec 2026 across 5 estimates, ranging $3.11 to $3.20.
L3Harris delivered a strong third quarter, with diluted EPS of $3.28 beating the $2.99 consensus by 9.7% and rising 33% year over year. Revenue of $6.06 billion increased 7% reported and 9% organically, even with one fewer week than in the prior-year quarter. Against the previous quarter, revenue grew from $5.88 billion, operating income from $654 million and EPS from $3.13. The headline operating improvement was broad-based: operating income increased 27% to $786 million and operating margin expanded to 13.0% from 11.0%, while segment margin held at 15.9%. Higher volume, lower corporate costs, lower interest expense and a lower tax rate supported EPS growth.
The defining feature of the print was demand converting into a record $53.2 billion backlog, following $19.3 billion in orders and 3.2x book-to-bill. Two seven-year missile propulsion awards accounted for $11 billion, with Missile Solutions at 11.8x book-to-bill. Cash conversion was also unusually strong: free cash flow reached $1.26 billion, up 195% year over year. Management raised the lower end of FY2026 revenue guidance by $300 million and lifted the EPS range, while holding FCF guidance at $3 billion. The quarter’s next test is converting the large, partly unfunded backlog into deliveries as the company scales production capacity.
The quarter’s two largest awards were seven-year undefinitized contracts to scale propulsion production: $6.3 billion for THAAD and $4.7 billion for PAC-3 MSE, excluding escalation. Together they added $11 billion of contractual backlog and validate the capacity investments underway. Management said PAC-3 solid rocket motor deliveries more than doubled from 2023 to 2026 and are expected to double again in 2027; THAAD deliveries are planned to triple next year. The company is investing more than $3 billion through 2030 in missile capacity, with about a quarter directed to supply-chain capacity. Execution remains the key dependency: new facilities, suppliers and production processes must scale to meet contract volumes.
For FY2026, L3Harris raised revenue guidance to $23.5–$23.7 billion from $23.2–$23.7 billion, lifting the midpoint by $150 million, and raised GAAP EPS guidance to $12.25–$12.35 from $11.80–$12.00. Organic revenue growth is now expected at 9%–10%; low-16% segment margin and $3 billion of free cash flow guidance were reaffirmed. Space & Mission Systems revenue guidance increased by $200 million to about $11.9 billion, while Communications & Spectrum Dominance was reduced by $100 million to about $7.9 billion. The 2028 framework retains 8% organic growth but now assumes roughly 16% segment margins, down from 16.3%, and $3 billion FCF, down from $3.5 billion. Management cited removal of assumed product-sale and investment gains, lower margin assumptions, cash funding of roughly $250 million in 401(k) contributions, and earlier missile-capacity spending.
Operating cash flow was $1.44 billion and free cash flow was $1.26 billion, compared with $546 million and $427 million, respectively, a year ago. Capital expenditures were $179 million, including $101 million in Missile Solutions, as capacity investment continues. Management maintained the $3 billion full-year FCF target and expects about $1 billion of fourth-quarter FCF, alongside $800 million of debt repayment. At quarter end, the company had $2.5 billion of cash and $550 million of short-term investments against $11.0 billion of debt; it reported net-debt leverage of about 1.9x. Capital allocation priorities begin with investment in the business and the dividend, followed by further deleveraging and share repurchases; management does not expect large-scale M&A in the foreseeable future.
