Using an unlevered Free Cash Flow to Firm (FCFF) model, we project L3Harris Technologies, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 5.3% to 9.3% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 85, DPO 52, DIO 32). At a 8.7% WACC with mid-year discounting, the terminal value (84% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 15.4x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $133.66 per share, suggesting LHX is overvalued by 61.8% at the current price of $349.58.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 1,262 | 1,284 | 1,382 | 1,485 | 1,623 | 1,663 |
| (−) Net Interest | 544 | 554 | 596 | 640 | 699 | 717 |
| (+) D&A | 375 | 395 | 434 | 440 | 462 | 474 |
| EBITDA | 2,180 | 2,232 | 2,411 | 2,565 | 2,784 | 2,854 |
| (−) Tax | 151 | 154 | 166 | 178 | 195 | — |
| (−) CapEx | 440 | 448 | 482 | 518 | 566 | — |
| (−) ΔWC | 678 | 79 | 343 | 361 | 483 | — |
| Free Cash Flow (FCF) | 911 | 1,551 | 1,421 | 1,508 | 1,541 | — |
| Peers' EBITDA Multiple | 15.4x | |||||
| Terminal Value | 43,953 | |||||
| WACC / Discount Rate | 8.69% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 874 | 1,369 | 1,154 | 1,127 | 1,059 | 28,982 |
| Enterprise Value | 34,564 | |||||
| Projection Period | 5,582 | 16.2% | ||||
| Terminal Value | 28,982 | 83.8% | ||||
| (−) Current Net Debt | 9,374 | |||||
| Equity Value | 25,190 | |||||
| (÷) Outstanding Shares | 188M | |||||
| Fair Price | $134 | -61.8% | ||||
| WACC \ EV/EBITDA Exit Multiple | 11.4x | 13.4x | 15.4x | 17.4x | 19.4x |
|---|---|---|---|---|---|
| 6.7% | $106 | $128 | $150 | $172 | $194 |
| 7.7% | $100 | $121 | $142 | $163 | $183 |
| 8.7% | $94 | $114 | $134 | $154 | $174 |
| 9.7% | $88 | $107 | $126 | $145 | $164 |
| 10.7% | $82 | $101 | $119 | $137 | $155 |
Current price: $349.58. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.