To The Moon

$L3Harris Technologies, Inc.(LHX)$ $Lockheed Martin(LMT)$  $RTX Corp(RTX)$  🚨 $LHX Q2 2026 earnings: Strong Fundamentals, Weak Stock Reaction

L3Harris $LHX is down roughly 10% today and sitting out the broader market rally, despite beating Q2 expectations and raising FY26 revenue and EPS guidance.

That disconnect is the story.

The underlying quarter was strong:

Revenue: $5.9B, +8% YoY

Diluted EPS: $3.13, +28% YoY

Orders: $7.3B

Book-to-bill: 1.2x

Backlog: Record $42B

Operating margin: 11.1%, +60 bps

Segment operating margin: 16.0%

Operating cash flow: $879M, +37%

Free cash flow: $771M, +37%

FY26 guidance was raised to:

Revenue: $23.2B-$23.7B

EPS: $11.80-$12.00

Free cash flow: $3.0B

So why is $LHX getting hit?

The biggest issue appears to be the delayed Axyv missile-business IPO, which has been pushed into 2027. That removes a major near-term catalyst and delays the potential value-unlocking event investors were expecting.

In other words, the operating business is accelerating while the market is focusing on the timing of the separation.

🐂 Bull case

Record $42B backlog and a 1.2x book-to-bill provide exceptional revenue visibility.

EPS increased 28% and free cash flow increased 37%, showing that earnings growth is increasingly translating into cash.

Segment operating margin reached 16.0%, with Communications & Spectrum Dominance emerging as a major profit driver.

Missile Solutions revenue increased 14% to roughly $1.05B, reinforcing the strategic value of the business that investors are waiting to see separately valued.

The raised FY26 guidance tells me management remains confident in demand and execution.

🐻 Bear case

The Axyv IPO delay removes an important 2026 catalyst and could keep the valuation discount in place longer.

A $42B backlog is only valuable if L3Harris can convert it efficiently. Capacity, labour and supply-chain constraints could become increasingly important as defence demand accelerates.

Space & Mission Systems remains a weaker-margin part of the portfolio, limiting the degree of operating leverage across the entire company.

The stock has now breached its YTD breakeven level and is trading around its lowest level since September 2025. That price action tells us investors are clearly worried about something beyond the headline earnings beat.

⚖️ My verdict: 🟢 Fundamentally bullish

I see a fascinating disconnect here.

L3Harris is growing revenue, expanding margins, generating more cash, increasing EPS, building a record backlog and raising guidance.

Yet the stock is being repriced because the Axyv catalyst has been pushed into 2027 and the market wants proof that this enormous backlog can translate into sustained profitable growth.

That makes $LHX a classic “show me” stock.

For me, the next key signals are backlog conversion, margin expansion and the eventual Axyv separation.

👉❓ Which matters more from here: the $42B backlog and raised guidance, or the delayed Axyv IPO?

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