Abstract

L3Harris Technologies, Inc. will report fourth-quarter results on January 29, 2026 Pre-Market; investors expect steady revenue growth with EBIT improvement despite EPS pressure, while recent analyst ratings lean positive as management prioritizes margin stabilization and execution on large defense and space backlogs.

Market Forecast

Consensus for the current quarter points to revenue of $5.78 billion, up 4.99% year over year, EBIT of $0.92 billion, up 11.19% year over year, and EPS of $2.76, down 19.11% year over year, implying mixed margin dynamics with operating leverage improvement but higher below-the-line headwinds. The company’s prior-quarter metrics provide a baseline for steady gross profit margin around 26.40% and a net profit margin near 8.16%, with adjusted EPS trends likely influenced by interest expense and integration costs year over year. The main business remains anchored by Space and Airborne Systems, Integrated Mission Systems, and Communication Systems, with Aerojet Rocketdyne now contributing a discrete revenue stream and backlog depth supporting near-term visibility. The segment with the strongest near-term potential is Space and Airborne Systems given government modernization priorities and classified backlog, with segment revenue of $1.81 billion last quarter and a positive year-over-year trajectory indicated by recent operating momentum.

Last Quarter Review

L3Harris Technologies, Inc. delivered last quarter revenue of $5.66 billion, a gross profit margin of 26.40%, GAAP net income attributable to shareholders of $0.46 billion, a net profit margin of 8.16%, and adjusted EPS of $2.70, with revenue growing 6.94% year over year and EPS declining 19.16% year over year. A notable highlight was EBIT of $0.90 billion, ahead of prior estimates, reflecting solid operating execution and improved program mix through the quarter. Main business highlights included Space and Airborne Systems revenue of $1.81 billion, Integrated Mission Systems revenue of $1.70 billion, Communication Systems revenue of $1.46 billion, and Aerojet Rocketdyne revenue of $0.76 billion, underscoring diversified growth drivers with backlog conversion across defense, space, and secure communications.

Current Quarter Outlook (with major analytical insights)

Core Defense and Intelligence Platforms

The central earnings driver this quarter remains the core program portfolio across Space and Airborne Systems and Integrated Mission Systems, where execution on government-funded modernization and classified programs supports stable top-line growth. With last quarter revenue of $1.81 billion and $1.70 billion in these two segments respectively, program cadence and supply chain normalization should enable incremental operating leverage, consistent with the forecast EBIT increase to $0.92 billion. The anticipated 4.99% revenue growth alongside an 11.19% EBIT expansion suggests margin mix benefiting from higher-value mission solutions and improved manufacturing throughput. However, EPS is forecast to decline 19.11% year over year, which likely reflects higher interest expense, lingering integration and transaction amortization related to acquisitions, and a tougher tax or share count comparison; this disconnect between operating gains and EPS underscores the importance of monitoring below-the-line items for total shareholder return. Investors will also watch order intake and book-to-bill in these segments, as visibility into multi-year modernization efforts is vital for sustaining the current trajectory into the first half of 2026.

Space and Airborne Systems as the Near-Term Growth Catalyst

Space and Airborne Systems stands out as the most promising near-term growth engine due to sustained demand for ISR payloads, space domain awareness, and resilient satellite architectures that underpin national security and allied capabilities. The segment’s $1.81 billion in last quarter revenue and strong program funding backdrop suggest continued momentum this quarter, aided by backlog conversion in space sensors and responsive space programs. Operating scale and a favorable mix toward mission-critical payloads support the EBIT growth profile implied by the company’s forecast, even as gross margin at the consolidated level remains around the mid-20% range. Key watch items include milestones on space payload deliveries, classified program execution, and any commentary on incremental awards that could strengthen the revenue growth outlook into 2026, especially where production ramps can bolster utilization and absorption. Should supply chain conditions remain stable, Space and Airborne Systems may contribute positively to consolidated gross margin while aero and mission integration programs stabilize margin variance.

Communications and Secure Networks as a Stabilizer

Communication Systems’ $1.46 billion last quarter revenue shows the segment’s stabilizing role, supporting core secure communications, tactical networks, and electronic warfare solutions. While this business has historically faced cyclical procurement patterns, current demand for interoperable communications and resilient networks should underpin a steady contribution this quarter. The margin profile here is important for consolidated EPS, as mix shift within communications can influence both gross profit and SG&A absorption. With EBIT guided higher at the consolidated level, this segment’s ability to deliver predictable execution without material cost overrun will help offset any EPS pressure from non-operating items. The update on international orders, interoperability upgrades, and progress on modernization deployments will help frame the growth and margin durability of Communications into the next fiscal period.

Aerojet Rocketdyne Integration and Operating Leverage

Aerojet Rocketdyne contributed $0.76 billion last quarter, evidencing the integration’s tangible top-line impact and the potential for operating leverage as the business scales within the portfolio. This quarter, incremental benefits are likely reflected more clearly at the EBIT line, consistent with the forecast’s 11.19% year-over-year EBIT growth, as manufacturing cadence improves and cost synergies are captured. The integration’s effect on EPS remains an important swing factor; higher interest costs and purchase accounting amortization can compress consolidated EPS even when operating performance improves. Investors should focus on updates regarding synergy capture, program milestone deliveries, and margin normalization targets for the integrated propulsion and space systems business. Positive commentary here can reinforce the case for improved free cash flow conversion as the integration matures.

Stock Price Drivers to Watch This Quarter

The most immediate stock price factors are the revenue and EBIT trajectory versus guidance implied by the forecast, the sustainability of a gross profit margin near 26.40%, and clarity around below-the-line items impacting EPS. A beat on EBIT with reiterated or improved margin commentary could outweigh EPS volatility if management provides visibility on deleveraging and amortization roll-off. Investors will also key in on book-to-bill, backlog quality, and any updates on high-profile programs in space, airborne ISR, and secure communications; strong order intake would validate the expected revenue expansion and support multiple stability. Finally, any indications of improved cash generation and capital deployment priorities—particularly balanced capital returns after debt reduction—may influence sentiment, given the discrepancy between operating momentum and EPS in the near term.

Analyst Opinions

Recent opinions over the past six months lean predominantly bullish. Notably, Morgan Stanley upgraded L3Harris to Overweight with an increased price target, citing strong momentum and strategic drivers and highlighting the company as a top value pick among defense peers. Bernstein maintained a Buy rating with a price target of $369.00, emphasizing the company’s improving execution and longer-term growth runway in space and defense platforms. Bank of America’s Ronald Epstein reiterated a Buy rating, reflecting confidence in backlog conversion and margin stabilization, while TD Cowen maintained a Buy rating with constructive commentary on program execution. Jefferies also maintained a Buy rating and articulated a positive case for fundamentals. Counterbalancing views included RBC Capital’s Hold, which underscores the need to see sustained margin improvement and EPS stability; however, the preponderance of coverage has skewed toward Buy or Overweight. The majority view, therefore, is bullish, grounded in evidence of operating improvement—EBIT forecast growth of 11.19% year over year—against a backdrop of modest top-line expansion of 4.99% year over year and ongoing integration progress. The central thrust of bullish arguments is that operating leverage, program mix, and backlog execution are improving, which should translate into a constructive setup for 2026 as below-the-line pressures ease and cash flow conversion strengthens. Bulls also point to the diversified business mix across Space and Airborne Systems, Integrated Mission Systems, Communications, and propulsion as a risk mitigant, with momentum in key modernization and space programs providing visibility into revenue and margin durability.