L3Harris Technologies: Strategic Expansion in Florida Fuels Long-Term Stock Outperformance in Defense Sector

In the high-stakes arena of aerospace and defense, infrastructure is the backbone of innovation. L3Harris Technologies (LHX) has made a bold move to cement its leadership in this sector by investing $100 million in a satellite integration and test facility in Palm Bay, Florida. This expansion, part of a broader $250 million investment in the state, adds 94,000 square feet of advanced manufacturing space dedicated to producing 50–100 satellites annually. These satellites are critical to the Department of Defense's (DOD) Golden Dome missile defense initiative, a $175 billion program over three years aimed at countering hypersonic threats. By aligning its infrastructure with national security priorities, L3Harris is not only securing its role in a multidecade defense contract but also positioning itself for sustained stock outperformance.

Strategic Infrastructure: A Catalyst for Growth

The Palm Bay facility is more than a manufacturing hub—it's a strategic enabler of U.S. defense capabilities. The expansion includes a high-bay clean room for simultaneous production of large and small satellites, alongside a 98,000-square-foot microelectronics facility. Together, these facilities will create 200 high-skill jobs, with average salaries exceeding $105,000, and are supported by a $2 million state grant. This infrastructure allows L3Harris to meet the DOD's urgent demand for on-orbit technology, including 18 space vehicles for the Space Development Agency's Tranche 2 Tracking Layer and 34 satellites for hypersonic missile tracking.

The company's alignment with the Golden Dome initiative is particularly significant. With a projected $542 billion market over 20 years, this program represents a long-term revenue tailwind. L3Harris aims to capture $10–15 billion of this opportunity by 2026, leveraging its expertise in space-based sensors, propulsion systems (via its Aerojet Rocketdyne acquisition), and rapid production capabilities. The Florida expansion ensures the company can deliver satellites at a 30-day turnaround, a critical advantage in a sector where speed and reliability are paramount.

Financial Performance: A Story of Resilience and Growth

L3Harris's strategic investments are translating into robust financial results. In Q2 2025, the company reported revenue of $5.4 billion, exceeding expectations, and non-GAAP EPS of $2.78, up 16% year-over-year. These results reflect the company's ability to scale production while maintaining margins. For 2025, L3Harris raised its revenue guidance to $21.4–21.7 billion and adjusted EPS to $10.30–10.50, signaling confidence in its growth trajectory.

The stock has mirrored this momentum. As of August 2025, LHX shares have surged 16.4% year-to-date, outperforming the SPDR S&P Aerospace & Defense ETF (XAR), which has declined 18.8% in the same period. While the stock trades at a P/E of 30.86, analysts project a normalization to 15.38x by 2030 as earnings grow at a 13.27% CAGR. This valuation gap suggests undervaluation, supported by a “Strong Buy” consensus from 20 analysts and a mean price target of $262.24.

Investment Thesis: A Defensive Play with Offensive Potential

L3Harris's expansion in Florida is a masterclass in strategic infrastructure. By securing a critical role in the Golden Dome initiative, the company is locking in long-term contracts while benefiting from U.S. defense budget growth. Its low debt-to-equity ratio (0.06x) and strong free cash flow ($574 million in Q2 2025) provide financial flexibility for further investments or shareholder returns. The company's LHX NEXT program, focused on cost savings and operational efficiency, is expected to drive margin expansion and free cash flow growth.

For investors, L3Harris represents a compelling blend of defensive stability and offensive growth. While it underperforms some peers like GE Aerospace in the short term, its alignment with high-priority defense programs and efficient capital allocation position it for outperformance over the next five years. The stock's current valuation, combined with a 1.74% dividend yield and a history of consistent payouts, makes it an attractive long-term hold.

Conclusion: A Cornerstone of the Defense Industrial Base

L3Harris Technologies is not just building satellites—it's building a legacy. Its Florida expansion is a testament to the company's ability to anticipate and meet the evolving needs of the U.S. defense sector. As hypersonic threats and global instability drive demand for advanced missile defense systems, L3Harris is uniquely positioned to capitalize on this growth. For investors seeking exposure to a company with a clear line of sight to long-term value creation, L3Harris offers a compelling case. The Golden Dome is not just a program; it's a golden opportunity.