L3Harris raises 2026 earnings outlook to $12.35 a share after strong results
Key Facts
On October 29, L3Harris raised its 2026 GAAP diluted earnings-per-share range to $12.25–$12.35, from prior guidance of $11.80–$12.00, alongside its third-quarter results. The company raised the low end of its annual revenue outlook to $23.5 billion, keeping the high end at $23.7 billion, compared with a previous range of $23.2–$23.7 billion. The update followed quarterly revenue of $6.1 billion, up 7% year over year and 9% organically. The company said growth was driven by double-digit increases in Space and Mission Systems and Missile Solutions. Results also topped analyst estimates for revenue and earnings per share, according to data cited in the earnings-call transcript.
Third-quarter GAAP diluted earnings per share were $3.28, up 33% from the year-earlier period. The company attributed the improvement to higher volume, lower corporate and interest expenses, and a lower effective tax rate. Operating margin rose to 13.0%, up 200 basis points year over year, driven by higher revenue and continued control of corporate expenses. Free cash flow was $1.3 billion, up 195% year over year, and the company kept its 2026 free cash flow guidance at $3 billion. The quarter’s results reflected a combination of revenue growth, improved profitability and liquidity as the company raised its full-year earnings range.
The company recorded $19.3 billion in orders during the quarter, lifting its backlog to a record $53.2 billion, with a book-to-bill ratio of 3.2 times. The ratio was 11.8 times in Missile Solutions, 1.9 times in Communications and Spectrum Dominance, and 1.0 times in Space and Mission Systems. Chief Executive Sam Mehta said the company recorded $11 billion in contracted backlog in Missile Solutions, tied to the PAC-3 and THAAD programs. Among the announced contracts was a seven-year agreement with a final value not yet specified, worth $6.3 billion, to increase propulsion production for the THAAD system, excluding price escalations. The company also announced a similar seven-year contract worth $4.7 billion to expand propulsion production for the PAC-3 MSE missile; its value excludes price escalations.
The company’s growth extended to international markets, where revenue rose 18% in the third quarter and accounted for 24% of total revenue. The chief financial officer said the international revenue share had increased by about 300 basis points over roughly a year. Indicators showed differences among segments in order flow strength: Missile Solutions posted the highest book-to-bill ratio, at 11.8 times, while the ratio was 1.9 times in Communications and Spectrum Dominance and 1.0 times in Space and Mission Systems. Contracts tied to the PAC-3 and THAAD programs were among those supporting orders in the missile segment. The company said the increase in quarterly operating margin was linked to higher revenue and continued management of corporate expenses.
In premarket trading on October 29, L3Harris shares rose 6.98% to $278.80, compared with a previous close of $260.61. The move followed results that topped analyst estimates: adjusted earnings per share were $3.28 versus an estimate of $2.96, and revenue was $6.06 billion versus an estimate of $5.93 billion. Management reaffirmed its 2028 framework, forecasting 8% organic revenue growth and segment operating margin of about 16%. But it lowered its free cash flow forecast for that year to $3 billion from $3.5 billion previously. The chief executive said the company was confident it could achieve 8% growth and potentially exceed it, noting that this depended in part on the timing of domestic and international budgets.