L3Harris Technologies, Inc. (NYSE:LHX) Stock's On A Decline: Are Poor Fundamentals The Cause?

Simply Wall St.12-13

L3Harris Technologies (NYSE:LHX) has had a rough month with its share price down 14%. We decided to study the company's financials to determine if the downtrend will continue as the long-term ...

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We decided to study the company's financials to determine if the downtrend will continue as the long-term ...</p>\n\n<a href=\"https://finance.yahoo.com/news/l3harris-technologies-inc-nyse-lhx-120018124.html\">Source Link</a>\n\n</div>\n","source":"yahoofinance","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>L3Harris Technologies, Inc. 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(NYSE:LHX) Stock's On A Decline: Are Poor Fundamentals The Cause?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-12-13 20:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/l3harris-technologies-inc-nyse-lhx-120018124.html><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>L3Harris Technologies (NYSE:LHX) has had a rough month with its share price down 14%. We decided to study the company's financials to determine if the downtrend will continue as the long-term ...</p>\n\n<a href=\"https://finance.yahoo.com/news/l3harris-technologies-inc-nyse-lhx-120018124.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4588","symbol_name":"碎股","start_time":0,"source_url":"https://finance.yahoo.com/news/l3harris-technologies-inc-nyse-lhx-120018124.html","article_id":"2491832276","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/IyMkmLaJHOnNINjqghKGMQ--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/4a39ac79965dbdc4c586d12ea5141f62"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2491832276","pubTimestamp":1734091218,"columns":[],"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"L3Harris Technologies  has had a rough month with its share price down 14%. We decided to study the company's financials to determine if the downtrend will continue as the long-term performance of a company usually dictates market outcomes. In this article, we decided to focus on L3Harris Technologies'  ROE.Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. In simpler terms, it measures the profitability of a company in relation to shareholder's equity.So, based on the above formula, the ROE for L3Harris Technologies is:. At first glance, L3Harris Technologies' ROE doesn't look very promising. We then compared the company's ROE to the broader industry and were disappointed to see that the ROE is lower than the industry average of 12%. Therefore, it might not be wrong to say that the five year net income decline of 6.2% seen by L3Harris Technologies was probably the result of it having a lower ROE. We reckon","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4588":"碎股","NYSE":"纽交所","LHX":"哈里斯公司","IE00BFXG1179.USD":"BNY MELLON U.S. EQUITY INCOME \"B\" (USD) INC","BK4187":"航天航空与国防","BK4585":"ETF&股票定投概念"},"translate_title":"L3Harris Technologies，Inc.（纽约证券交易所代码：LHX）股票下跌：基本面不佳是原因吗？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"LHX":1,"NYSE":1},"content_text":"L3Harris Technologies (NYSE:LHX) has had a rough month with its share price down 14%. We decided to study the company's financials to determine if the downtrend will continue as the long-term performance of a company usually dictates market outcomes. In this article, we decided to focus on L3Harris Technologies'  ROE. \n Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. In simpler terms, it measures the profitability of a company in relation to shareholder's equity. \n See our latest analysis for L3Harris Technologies \n How Is ROE Calculated? \n The formula for ROE is: \n Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity \nSo, based on the above formula, the ROE for L3Harris Technologies is:\n6.2% = US$1.2b ÷ US$19b (Based on the trailing twelve months to September 2024).\n The 'return' is the income the business earned over the last year. So, this means that for every $1 of its shareholder's investments, the company generates a profit of $0.06. \n Why Is ROE Important For Earnings Growth? \n We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. Based on how much of its profits the company chooses to reinvest or \"retain\", we are then able to evaluate a company's future ability to generate profits. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features. \n L3Harris Technologies' Earnings Growth And 6.2% ROE \n At first glance, L3Harris Technologies' ROE doesn't look very promising. We then compared the company's ROE to the broader industry and were disappointed to see that the ROE is lower than the industry average of 12%. Therefore, it might not be wrong to say that the five year net income decline of 6.2% seen by L3Harris Technologies was probably the result of it having a lower ROE. We reckon that there could also be other factors at play here. For example, it is possible that the business has allocated capital poorly or that the company has a very high payout ratio. \n That being said, we compared L3Harris Technologies' performance with the industry and were concerned when we found that while the company has shrunk its earnings, the industry has grown its earnings at a rate of 8.9% in the same 5-year period. \n\n\n\n  NYSE:LHX Past Earnings Growth December 13th 2024\n \n\n The basis for attaching value to a company is, to a great extent, tied to its earnings growth. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. Doing so will help them establish if the stock's future looks promising or ominous. Has the market priced in the future outlook for LHX? You can find out in our latest intrinsic value infographic research report.  \n Is L3Harris Technologies Efficiently Re-investing Its Profits? \n L3Harris Technologies' declining earnings is not surprising given how the company is spending most of its profits in paying dividends, judging by its three-year median payout ratio of 73% (or a retention ratio of 27%). With only a little being reinvested into the business, earnings growth would obviously be low or non-existent. You can see the 3 risks we have identified for L3Harris Technologies by visiting our risks dashboard for free  on our platform here. \n In addition, L3Harris Technologies has been paying dividends over a period of at least ten years suggesting that keeping up dividend payments is way more important to the management even if it comes at the cost of business growth. Existing analyst estimates suggest that the company's future payout ratio is expected to drop to 30% over the next three years. The fact that the company's ROE is expected to rise to 15% over the same period is explained by the drop in the payout ratio. \n Conclusion \n Overall, we would be extremely cautious before making any decision on L3Harris Technologies. The company has seen a lack of earnings growth as a result of retaining very little profits and whatever little it does retain, is being reinvested at a very low rate of return. With that said, we studied the latest analyst forecasts and found that while the company has shrunk its earnings in the past, analysts expect its earnings to grow in the future. Are these analysts expectations based on the broad expectations for the industry, or on the company's fundamentals? Click here to be taken to our analyst's forecasts page for the company. \nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"dataReport","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2491832276"}