L3Harris

Methodology

L3Harris' long-cycle defense contracts and multi-year backlogs create predictable earnings streams that make this method straightforward to apply. Government budget visibility and program stability provide reasonable clarity for sustainable earnings projections. Be cautious during periods of major defense budget shifts or acquisition integration as these can temporarily distort normalized earnings power.

Methodology

Defense contractors often trade at low PEG ratios reflecting slower growth compared to commercial tech, but L3Harris benefits from mission-critical technology exposure. The ratio works well for comparing against defense peers, though investors should normalize earnings for acquisition-related charges. Government spending cycles and geopolitical tensions can cause valuation expansion beyond what growth alone suggests.

Methodology

L3Harris typically offers modest but growing dividends as management balances shareholder returns with R&D and acquisition needs. The dividend adds meaningful value to total return expectations, making PEGY more attractive than standalone PEG. Cash generation from defense contracts supports consistent dividend growth alongside modest earnings expansion.