LHX — L3Harris Technologies, Inc.

Market sentiment is dominated by the August 17, 2026 abrupt resignation of Chairman/CEO Chris Kubasik over a Code of Conduct violation, the related class-action investigation, and a macro tape punishing long-duration industrials as 30-year yields exceed 5.3%. A Q2 beat and raised guidance have not been enough to stop the slide toward 52-week lows.

Growth is accelerating, not rolling over. Quarterly revenue went from $5.43B in Q2 2025 to $5.66B, $5.72B, and $5.88B in Q2 2026, with YoY growth improving from roughly 2% to over 8%. EPS jumped from $2.44 to $3.13 YoY, and operating margin has held in the 10.8–11.2% range after a Q4 2025 dip driven by charges. The negative FCF quarter in Q1 looks seasonal rather than structural, and Q2 2026 FCF of $771M was up 37% YoY. The clear recent trend is an upward fundamental inflection, supported by a record $42B backlog.

As of 2026-08-27, the stock is cheaper than its own history but only fair in absolute terms. TTM P/E of 26.3 is below the 5-year average of 31.1, and forward P/E is about 21.9x on next-fiscal-year EPS of $11.94. Price-to-sales of 2.13 is also below the 5-year average of 2.26. The offset is a PEG of 2.44 and a modest 10% operating margin, so this is becoming interesting on valuation but is not yet a deep-value situation.

The stock is down roughly 31% from its 52-week high while forward earnings estimates have moved up — that is multiple compression, not an earnings collapse. At $261.98, the market is pricing in governance risk, Missile Solutions IPO uncertainty, and macro headwinds. If the new CEO stabilizes the ship and Q3 confirms the raised guidance, the multiple should revert toward the mid-20s; if execution slips, the current ~22x forward multiple is deserved.

Technicals are weak and not yet bottoming. As of 2026-08-27, RSI(14) was 32.95, close to oversold but not washed out. Price was 5.96% below the 20-day SMA, 8.56% below the 50-day SMA, and 16.85% below the 200-day SMA, all consistent with a downtrend. The 52-week low at $258.54 is the important nearby support; reclaiming the 20-day around $279 would be the first meaningful stabilisation signal.

• 30-year Treasury yields above 5.3% are pressuring long-duration industrial and defense valuations.
• Sector rotation out of defense/defensives into infrastructure/tech has weighed on LHX.
• Rising global defense budgets and geopolitical demand support the record backlog and revenue growth.
• Government budget/appropriations uncertainty creates timing risk on contract awards and program starts.
• Higher interest rates raise the cost of the planned $3B missile infrastructure buildout.

• Q3 FY2026 earnings in late October 2026 — evidence of execution under new CEO Sam Mehta.
• More detail or a firm timeline on the planned Missile Solutions IPO, which would remove a structural overhang.
• Stabilization of leadership/strategy and any resolution of the class-action investigation.
• Ex-dividend date on September 4, 2026, with a $1.25/share payout supporting income demand.

• CEO Code of Conduct scandal and class-action investigation could reveal additional governance or legal issues.
• Execution risk on the $3B missile infrastructure capex plan, which could pressure free cash flow and margins.
• Persistent high long-term interest rates could keep the multiple compressed even if fundamentals improve.
• Margin pressure from fixed-price development programs, supply-chain constraints, or labor costs.

L3Harris is a solid, well-positioned defense franchise with record backlog and accelerating earnings, but the stock is stuck near 52-week lows because of a self-inflicted governance wound and broad macro headwinds. At $262, much of the bad news is in the price and a recovery toward my ~$299 fair-value estimate is plausible over the next 12 months; still, the broken chart and leadership uncertainty argue for a neutral stance until the stock proves a floor.

Calculated by applying a justified 25.0x forward P/E to next-fiscal-year consensus EPS of $11.94. The 25x multiple is about a 20% discount to the 5-year average P/E of 31.1 and roughly in line with the current TTM P/E, reflecting solid growth and record backlog but also governance and execution uncertainty. Result: $298.50.