L3Harris Technologies Reports Mixed Q4 Results; Shares Decline in Premarket Trading
L3HARRIS TECHNOLOGIES INC (NYSE:LHX) announced its financial results for the fourth quarter and full year of 2025, delivering a performance that narrowly missed revenue expectations while beating on the bottom line. The defense technology contractor described 2025 as an "inflection point," driven by strong demand aligned with national defense priorities. However, the market's initial reaction was negative, with shares trading down nearly 4% in pre-market activity following the report.
Earnings and Revenue Versus Estimates
The company's fourth-quarter results presented a split picture when measured against Wall Street's forecasts.
- Revenue: Reported Q4 revenue was $5.65 billion. This fell short of the analyst consensus estimate of approximately $5.83 billion, representing a miss of roughly 3%.
- Earnings Per Share (Non-GAAP): The company reported non-GAAP diluted EPS of $2.86 for the quarter. This exceeded the analyst estimate of $2.79, marking an earnings beat of about 2.5%.
For the full year 2025, L3Harris reported revenue of $21.9 billion, a 3% increase (5% organically), and non-GAAP diluted EPS of $10.73, an 11% year-over-year increase. The company highlighted a record book-to-bill ratio of 1.3x, with orders reaching $27.5 billion, signaling strong future demand.
Market Reaction and Price Action
The immediate market reaction, as seen in pre-market trading, suggests investors are focusing on the revenue shortfall and potentially aspects of the company's forward-looking commentary. The nearly 4% decline contrasts with the stock's positive performance over the past month, which had seen shares rise over 21%. This pullback indicates the market was likely anticipating a stronger top-line result or clearer guidance that exceeded expectations.
Key Highlights from the Earnings Release
Chairman and CEO Christopher Kubasik stated that the company's portfolio alignment with critical defense needs drove "record orders and strong organic growth, margins and cash flow." Beyond the headline numbers, several operational and financial metrics stood out:
- Strong Cash Generation: Cash from operations surged 21% to $3.1 billion for the full year, while adjusted free cash flow also increased 21% to $2.8 billion.
- Segment Performance: The Communication Systems segment was a standout, with revenue up 4% for the year and operating margin expanding to 25.2%. The Aerojet Rocketdyne segment also posted strong organic revenue growth of 12%.
- Corporate Costs and Restructuring: The company noted significant "unallocated corporate items" that impacted GAAP operating income, including costs related to its "LHX NeXt" transformation initiative. It also recorded an $85 million non-cash impairment of goodwill in the Aerojet Rocketdyne segment related to its Space Technology business.
- 2026 Guidance and Restructuring: L3Harris initiated guidance for 2026 and announced a significant reorganization of its business into three new segments: Space & Mission Systems, Communication & Spectrum Dominance, and Missile Solutions. This restructuring is designed to better align capabilities and business models. The company noted that the financials of the Space Technology business, which is slated for a majority stake sale in the second half of 2026, are included in the current guidance.
Forward Outlook and Analyst Estimates
While the press release initiates 2026 guidance, specific numerical targets were not provided in the summarized context. This leaves analyst estimates as the primary benchmark for near-term expectations. According to provided data, analysts are currently modeling:
- Q1 2026 Revenue: Approximately $5.47 billion.
- Full-Year 2026 Revenue: Approximately $23.56 billion.
- Full-Year 2026 EPS (Non-GAAP): Approximately $12.59.
Investors will be keenly awaiting further details on the company's formal 2026 financial targets to compare against these consensus figures. The planned divestiture of the Space Technology group later in the year adds another layer of complexity to year-over-year comparisons.
For a detailed breakdown of historical earnings, future estimates, and analyst projections for L3Harris Technologies, you can review the data here.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
