Munger Mode rating: 2 out of 5 — Sell. Our own rating from the research report below, on business quality first: moat durability and management, with price separating the top three.
We have spent our lives looking for businesses that can raise prices without losing customers, reinvest earnings at high rates, and be run by people we'd trust with our wallets unattended. L3Harris is a well-run, deeply entrenched defense contractor with a record $42 billion backlog, improving margins, and a management team executing crisply on its promises. It is also a business whose sole meaningful customer sets its profit margins, whose balance sheet carries $20 billion of goodwill against negative tangible equity, and whose growth has been assembled through serial acquisition rather than organic compounding. That combination — durable entrenchment without durable pricing power — is the signature of a good business, not a wonderful one. At roughly 23x forward earnings and 17x free cash flow, the price already reflects the rearmament cycle's tailwinds.
Recent filings analysed: 10-Q (2026-07-30), 8-K (2026-07-29), 8-K (2026-07-24), 8-K (2026-05-12).
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