Raytheon Co.

Raytheon Co. (RTN - Analyst Report) announced first-quarter results in late April. Bookings were strong at $6.5 billion and backlog was a record $37.7 billion. Earnings per share of 93 cents beat the consensus estimate by 12% and outpaced the year-prior result. Raytheon’s ROE of 13% reflects growth and is almost double the industry average of 7%. The annual dividend was hiked by 10% from $1.02 per share to $1.12. The quarterly cash dividend of 28 cents per share currently translates into dividend yield of 1.8%, which is above the industry average of 0.1%.

Full Analysis

Raytheon Company is a technology player specializing in defense, homeland security and other government markets throughout the world. With a history of innovation spanning 85 years, Raytheon provides state-of-the-art electronics, mission systems integration and other capabilities in the areas of sensing; effects; and command, control, communications and intelligence systems, as well as a broad range of mission support services. With headquarters in Waltham, Mass., Raytheon employs 72,000 people worldwide.

Recent Events

The company’s most recent contract award was a U.S. Air Force contract to continue evolving a system for the sharing of near real-time, actionable intelligence information among warfighters.

Known as the Distributed Common Ground System (DCGS) Integration Backbone (DIB), the next-generation DIB or DIB 1.3, Raytheon explained that it will address standards compliance, baseline convergence, enterprise interoperability and unique U.S. Air Force, Army and Navy requirements.

"The DIB technology has been successful in providing information interoperability, and the next evolution of the DIB will ensure successful integration to fight the war on terror," said Anthony DiFurio, director of Multi-Intelligence Systems for Raytheon's Intelligence and Information Systems. "We are looking forward to providing the U.S. military a service enabling it to integrate its systems with faster efficiency and effectiveness."

Growth

Raytheon announced first-quarter results in late April. Bookings were strong at $6.5 billion and backlog was a record $37.7 billion.

First-quarter earnings per share of 93 cents beat the consensus estimate by 12% and outpaced the year-prior result. The company noted that the higher earnings can be primarily attributed to increased volume, combined with lower net interest and pension expense.

"With the strong performance in the first quarter, the Company is off to a good start," said William H. Swanson, Raytheon's Chairman and CEO. "Our strong bookings, record backlog and solid operating performance demonstrate the Company is continuing to execute and is well positioned going forward."

Quarterly net sales reached $5.4 billion, reflecting an increase of 11% from the year-prior $4.8 billion.

Raytheon’s ROE of 13% reflects growth and is almost double the industry average of 7%. The company’s net margin has demonstrated solid growth at a rate of 11.9%, while the industry average is much lower at 0.8%.

The annual dividend was hiked by 10% from $1.02 per share to $1.12. The quarterly cash dividend of 28 cents per share currently translates into dividend yield of 1.8%, which is above the industry average of 0.1%.

Income

In the first quarter, Raytheon repurchased 5.5 million shares of common stock for $340 million, as part of its previously announced share repurchase program. This Growth & Income pick also saw an increase in its dividend as previously reported. The annual dividend was hiked by 10% from $1.02 per share to $1.12. The quarterly cash dividend of 28 cents per share currently translates into dividend yield of 1.8%, which is competitive within its industry as the company operates in an industry that offers little in terms of dividends. The current industry average stands at 0.1%.

Higher Estimates

Wall Street boosted earnings forecasts. Current full-year 2008 projections of $3.90 per share moved up from the two months-ago level of $3.87 per share.

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