VOL. XCIV, NO. 247
★ WIDE MOAT STOCKS & COMPETITIVE ADVANTAGES ★
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Friday, January 2, 2026
L3Harris Technologies, Inc.
LHX · NYSE
Weighted average of segment moat scores, combining moat strength, durability, confidence, market structure, pricing power, and market share.
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Overview
L3Harris is a U.S. aerospace and defense contractor organized into four reported segments: Space & Airborne Systems, Integrated Mission Systems, Communication Systems, and Aerojet Rocketdyne. Its core moat is rooted in defense procurement: entrenched government/prime-contractor relationships, high switching costs from platform integration and sustainment, and heavy compliance requirements (clearances and mandated cybersecurity controls). Communication Systems contributes the largest share of segment operating income due to differentiated secure communications and vision products. Aerojet Rocketdyne adds propulsion capacity in a concentrated solid rocket motor market, with industry structure sensitive to capacity expansions and potential new entrants.
Primary segment
Space & Airborne Systems
Market structure
Oligopoly
Market share
—
HHI: —
Coverage
4 segments · 8 tags
Updated 2026-01-02
Segments
Space & Airborne Systems
Defense & intelligence space and airborne mission systems (payloads, sensors, avionics, mission networks)
Revenue
31.9%
Structure
Oligopoly
Pricing
moderate
Share
—
Peers
Integrated Mission Systems
Defense ISR, electronic warfare, mission systems integration, autonomy and sustainment services
Revenue
31.8%
Structure
Oligopoly
Pricing
moderate
Share
—
Peers
Communication Systems
Secure tactical communications, datalinks, SATCOM terminals, and defense integrated vision
Revenue
25.4%
Structure
Oligopoly
Pricing
moderate
Share
—
Peers
Aerojet Rocketdyne
Rocket propulsion (solid rocket motors and space propulsion) for missiles, interceptors, hypersonics, and space launch/upper stages
Revenue
10.9%
Structure
Duopoly
Pricing
moderate
Share
—
Peers
Moat Claims
Space & Airborne Systems
Defense & intelligence space and airborne mission systems (payloads, sensors, avionics, mission networks)
Revenue/operating profit shares computed from FY2024 segment results (fiscal year ended 2025-01-03). Shares use the sum of the four operating segments (exclude corporate/Other eliminations).
Government Contracting Relationships
Legal
Government Contracting Relationships
Strength
Durability
Confidence
Evidence
A large share of revenue is tied to U.S. government-funded programs (directly and via primes), creating repeat-award dynamics and long program cycles.
Erosion risks
- Continuing resolutions or budget reprioritization delaying starts
- Recompete losses on major programs
- Performance issues leading to contract penalties or loss of follow-on work
Leading indicators
- Segment backlog trend
- Win rate on recompetes and major awards
- U.S. defense budget topline and procurement accounts
Counterarguments
- Government programs are frequently competed and price-sensitive at recompete
- Large primes can internalize more subsystem work over time
Design In Qualification
Demand
Design In Qualification
Strength
Durability
Confidence
Evidence
Space and airborne subsystems are engineered into specific platforms and missions; replacing an incumbent typically requires multi-year requalification and integration work.
Erosion risks
- Modular open-systems architectures reducing supplier lock-in
- Technology leapfrogs from competitors (sensors, EW, space payloads)
- Government pushes for dual-sourcing to reduce dependence
Leading indicators
- Follow-on production lots on existing platforms
- Share of revenue from sustainment/aftermarket vs new build
- Program win mix (classified vs unclassified)
Counterarguments
- Platform owners can re-compete payloads and avionics at refresh milestones
- Defense customers may mandate open interfaces to enable supplier substitution
Compliance Advantage
Legal
Compliance Advantage
Strength
Durability
Confidence
Evidence
Classified work and DoD supply-chain rules create a barrier: cleared staffing and mandated cybersecurity controls are costly and take time to build.
Erosion risks
- Compliance failures leading to contract restrictions or reputational damage
- Policy changes that widen eligibility or reduce required controls
- Cyber incidents and associated remediation costs
Leading indicators
- Security clearance and facility clearance footprint
- Audit findings / cybersecurity assessment outcomes
- Flow-down compliance posture across key subcontractors
Counterarguments
- Large peers also have extensive clearance and compliance infrastructure
- Compliance is necessary but not sufficient to win programs
Integrated Mission Systems
Defense ISR, electronic warfare, mission systems integration, autonomy and sustainment services
Revenue/operating profit shares computed from FY2024 segment results (fiscal year ended 2025-01-03). Shares use the sum of the four operating segments (exclude corporate/Other eliminations).
Switching Costs General
Demand
Switching Costs General
Strength
Durability
Confidence
Evidence
Mission systems integration and long-term sustainment on fielded platforms create practical switching costs and long customer decision cycles.
Erosion risks
- Customer-driven open architectures reducing integration lock-in
- Shifts toward software-defined capabilities favoring different vendors
- Cost overruns reducing customer confidence
Leading indicators
- Sustainment revenue mix and renewal rates
- Major platform integration wins
- Program performance metrics and award fees
Counterarguments
- Defense customers can recompete integration work at major upgrade points
- Systems integration is a contested space with multiple capable primes
Government Contracting Relationships
Legal
Government Contracting Relationships
Strength
Durability
Confidence
Evidence
Government procurement relationships and program backlog underpin recurring demand across ISR/EW and missionization programs.
Erosion risks
- Budget shifts away from ISR/EW priorities
- Geopolitical export restrictions affecting allied orders
- Contract protests delaying awards
Leading indicators
- Book-to-bill and backlog
- International order momentum
- DoD modernization spending in ISR/EW
Counterarguments
- Large peers have comparable government relationships
- Winning is driven by program-specific technical and price tradeoffs
Capex Knowhow Scale
Supply
Capex Knowhow Scale
Strength
Durability
Confidence
Evidence
Scale in engineering talent, test infrastructure, and program execution know-how supports bid competitiveness and delivery reliability in complex defense work.
Erosion risks
- Talent attrition in cleared engineering roles
- Program complexity increasing execution risk
- Peers matching investments in key technologies
Leading indicators
- Hiring/attrition trends in cleared technical roles
- R&D/IRAD intensity and technology milestones
- Schedule performance on major programs
Counterarguments
- Other large defense primes also operate at similar engineering scale
- Scale can create bureaucracy and slow responsiveness
Communication Systems
Secure tactical communications, datalinks, SATCOM terminals, and defense integrated vision
Revenue/operating profit shares computed from FY2024 segment results (fiscal year ended 2025-01-03). Shares use the sum of the four operating segments (exclude corporate/Other eliminations).
Design In Qualification
Demand
Design In Qualification
Strength
Durability
Confidence
Evidence
Fielded secure radios, waveforms, and integrated vision systems become embedded in customer workflows and interoperability requirements, making replacement slow and risky.
Erosion risks
- Standardization on more open waveforms/interfaces
- Rapid technology shifts (software-defined radios, spectrum, AI-enabled comms)
- Customer push for modular multi-vendor networks
Leading indicators
- Share of wins in key radio and datalink programs
- Sustainment and upgrade revenue growth
- International order momentum (FMS and direct commercial sales)
Counterarguments
- Interoperability standards can enable alternative suppliers
- Defense buyers may prioritize price once requirements are met
Procurement Inertia
Demand
Procurement Inertia
Strength
Durability
Confidence
Evidence
Large deployments and training/operational standardization can create inertia in procurement decisions, especially for communications gear tied to doctrine and networks.
Erosion risks
- Program consolidation and re-competes shifting suppliers
- Budget pressure driving down spend per unit
- Operational shifts (e.g., more commercial tech adoption)
Leading indicators
- Recompete outcomes and contract vehicle share
- Unit volumes vs ASP trends in tactical comms
- Public safety and federal agency funding cycles
Counterarguments
- DoD can and does re-compete radio contracts
- Training inertia is weaker if new systems deliver clear capability gains
Compliance Advantage
Legal
Compliance Advantage
Strength
Durability
Confidence
Evidence
Winning and executing DoD communications programs requires meeting mandated cybersecurity controls and incident reporting obligations; this creates fixed costs and screens out weaker vendors.
Erosion risks
- Compliance becomes table-stakes as more vendors meet requirements
- Regulation changes that reduce requirements or expand equivalency paths
- Cyber incidents causing operational disruption and penalties
Leading indicators
- CMMC/DFARS compliance status and assessment results
- Cybersecurity incident metrics and response times
- Supply-chain flow-down compliance among subcontractors
Counterarguments
- Large competitors are equally capable of compliance
- Cyber compliance does not ensure product-level differentiation
Aerojet Rocketdyne
Rocket propulsion (solid rocket motors and space propulsion) for missiles, interceptors, hypersonics, and space launch/upper stages
Revenue/operating profit shares computed from FY2024 segment results (fiscal year ended 2025-01-03). Shares use the sum of the four operating segments (exclude corporate/Other eliminations).
Capacity Moat
Supply
Capacity Moat
Strength
Durability
Confidence
Evidence
Large solid rocket motor supply is capacity-constrained and capital intensive; expansions require significant investment and time, limiting near-term competition.
Erosion risks
- New entrants scaling production (including defense startups)
- Government-directed industrial base expansion reducing scarcity value
- Input constraints in energetics and specialty materials
Leading indicators
- Capacity additions and facility ramp milestones
- DoD munitions and missile procurement rates
- Lead times and award cadence for propulsion programs
Counterarguments
- Sustained demand can justify new entrants and capacity build-outs
- Government may subsidize additional capacity to reduce concentration risk
Keystone Component
Supply
Keystone Component
Strength
Durability
Confidence
Evidence
Propulsion is a strategic chokepoint: rocket motors are essential inputs for missiles and air/missile defense systems, giving suppliers leverage and program longevity.
Erosion risks
- Shift toward alternative propulsion technologies
- Design changes that allow broader sourcing
- Program cancellations or demand volatility
Leading indicators
- Share of propulsion content in major missile programs
- Backlog and funded orders for propulsion units
- Competitive awards for new motor designs
Counterarguments
- Prime contractors can influence sourcing and negotiate pricing
- Government can mandate competition or dual-source where feasible
Government Contracting Relationships
Legal
Government Contracting Relationships
Strength
Durability
Confidence
Evidence
Aerojet Rocketdyne serves long-duration government and prime-contractor programs in missiles and space, supporting a backlog-driven recurring revenue profile.
Erosion risks
- Procurement policy changes increasing competition
- Schedule slips and quality issues in propulsion production
- Regulatory/export restrictions affecting some programs
Leading indicators
- Segment backlog and book-to-bill
- DoD missile defense and munitions budget trends
- Production yield, scrap, and delivery performance
Counterarguments
- Industrial base policy can aim to reduce supplier dependence
- Concentration risk can lead customers to invest in alternate suppliers
Evidence
was 76%
Used to support the claim that revenue is predominantly tied to U.S. government-funded demand.
The annual report describes SAS as providing end-to-end mission solutions across design, integration, production, and sustainment-activities that increase requalification costs for switching.
23K+ cleared personnel
A large pool of cleared staff can be a barrier to entry for classified work.
cyber incident reporting
Shows DoD contracting clauses can mandate security controls and incident reporting, raising compliance burden for contractors.
Phased Implementation ... Has Begun
CMMC implementation timeline and requirements add an eligibility hurdle for firms in the DoD supply chain.
Showing 5 of 16 sources.
Risks & Indicators
Erosion risks
- Continuing resolutions or budget reprioritization delaying starts
- Recompete losses on major programs
- Performance issues leading to contract penalties or loss of follow-on work
- Modular open-systems architectures reducing supplier lock-in
- Technology leapfrogs from competitors (sensors, EW, space payloads)
- Government pushes for dual-sourcing to reduce dependence
Leading indicators
- Segment backlog trend
- Win rate on recompetes and major awards
- U.S. defense budget topline and procurement accounts
- Follow-on production lots on existing platforms
- Share of revenue from sustainment/aftermarket vs new build
- Program win mix (classified vs unclassified)
Curation & Accuracy
This directory blends AI‑assisted discovery with human curation. Entries are reviewed, edited, and organized with the goal of expanding coverage and sharpening quality over time. Your feedback helps steer improvements (because no single human can capture everything all at once).
Details change. Pricing, features, and availability may be incomplete or out of date. Treat listings as a starting point and verify on the provider’s site before making decisions. If you spot an error or a gap, send a quick note and I’ll adjust.