11 Undervalued Aerospace Stocks To Buy According to Hedge Funds

5. L3Harris Technologies, Inc. (NYSE:LHX)

Forward Price to Earnings Ratio: 17.18

Number of Hedge Fund Holders: 40

L3Harris Technologies, Inc. (NYSE:LHX) is an American defense company, known for its wireless and night vision equipment, command and control systems, avionics, and terrestrial and spaceborne antennas. It was formed in 2019 after a merger between Harris Corporation and L3 Technologies.

In June, the company received a $34 million contract from the United States Air Force to modernize the B-52 Stratofortress bomber by consolidating the functions of the electronic warfare officer and navigator into one position. Earlier in the year, L3Harris Technologies, Inc. (NYSE:LHX) was awarded a $919 million contract to design and build satellites for the Space Development Agency to provide missile warning coverage. High-value contracts such as these demonstrate the company’s significance in the aerospace and defense industry.

On October 25, L3Harris Technologies, Inc. (NYSE:LHX) announced financial results for the third quarter of 2024. Revenue was posted at $5.3 billion, up 8% from last year. Operating margins increased by 70 basis points to 15.7%, driven by continuing program executions and strong operational performance, with significant contributions from LHX NeXt. Non-GAAP diluted EPS was $3.34, growing 5% year-over-year.

The company is witnessing strong demand across the board, with total awards of over $7 billion in Q3. This included two contracts for the Navy – a $600 million next-generation jammer contract and a $1.2 billion IDIQ contract to support the P-8A Poseidon fleet. These awards have resulted in LHX having a book-to-bill ratio of 1.4, with all business segments delivering a ratio of at least one. The company’s backlog has reached a record $34 billion.

After robust results in Q3, L3Harris Technologies, Inc. (NYSE:LHX) has raised its guidance for the full year. It now expects an annual revenue between $21.1 million and $21.3 billion, with a segment operating margin of 15.5%. EPS is anticipated to be in the range of $12.95 to $13.15 per share. Wall Street analysts have a consensus Buy rating for the stock, with an average share price upside potential of over 16%.

As per Insider Monkey’s database for Q3 2024, 40 hedge funds held a stake in the company. This, coupled with its low forward P/E ratio, makes L3Harris Technologies, Inc. (NYSE:LHX) one of the top undervalued aerospace stocks to buy according to hedge funds.