L3Harris Gains From Strong Defense Spending & Global Demand

L3Harris Technologies LHX is a leading aerospace and defense company with a strong presence in defense electronics, space systems and intelligence communications. Backed by robust government support, growing international demand and expanding capabilities in missile and space technologies, the company is well-positioned for long-term growth.

However, this Zacks Rank #3 (Hold) stock faces risks related to ongoing geopolitical uncertainties and labor shortages, which may pose challenges to its near-term performance.

LHX’s Tailwinds

L3Harris is set to benefit from rising U.S. defense spending, with military expenditure expected to increase to nearly $1.5 trillion by 2027. This should drive demand for advanced defense systems, supporting companies like L3Harris with strong capabilities in space, intelligence and communications.

The company is also well-positioned in next-generation missile defense programs like Golden Dome, supported by its advanced missile warning sensors. L3Harris is also expanding its missile and propulsion capabilities through investments like its new Arkansas facility and a proposed $1 billion partnership to boost rocket motor production.

Additionally, acquisitions like Aerojet Rocketdyne and Tactical Data Links, along with strategic partnerships and portfolio optimization efforts, are enhancing its capabilities and supporting long-term growth.

LHX’s Headwinds

Despite strong growth drivers, L3Harris faces risks from ongoing geopolitical uncertainties, including conflicts across Eastern Europe, the Middle East and Asia, as well as potential trade restrictions and sanctions that could impact its operations and profitability.

The company is also exposed to persistent labor shortages across the aerospace-defense industry. An aging workforce, rising retirements and high attrition among younger employees may lead to production delays and affect its ability to meet growing demand.

LHX Stock’s Price Performance

Shares of LHX have gained 3.5% in the past month against the industry’s 5.7% decline.

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Stocks to Consider

Some better-ranked stocks from the same sector are StandardAero Inc. SARO, GE Aerospace GE and Transdigm Group TDG. Each of these stocks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

SARO delivered an average earnings surprise of 0.75% in the last four quarters. The Zacks Consensus Estimate for SARO’s 2026 earnings is pinned at $1.41 per share, which indicates year-over-year growth of 18.5%.

GE delivered an average earnings surprise of 14.27% in the last four quarters. The consensus estimate for GE’s 2026 earnings is pegged at $7.44 per share, which implies year-over-year growth of 16.8%.

TDG delivered an average earnings surprise of 2.32% in the last four quarters. The consensus estimate for TDG’s fiscal 2026 earnings stands at $39.46 per share, which suggests year-over-year growth of 5.7%.

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Transdigm Group Incorporated (TDG): Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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