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Raytheon (RTN) to Report Q3 Earnings: What's in Store?
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Defense prime Raytheon Company is scheduled to release third-quarter 2016 results on Oct 27, before the opening bell.
In the prior quarter, the company reported a positive earnings surprise of 2.94%. Notably, Raytheon outperformed the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 5.23%.
Let’s see how things are shaping up at the company prior to this announcement.
In its missile business, Raytheon continues to witness sustained improvement and the momentum is expected to be sustained over the next five years. In the international markets, a radar upgrade in Qatar represents a $1 billion opportunity for Raytheon which will get reflected in the yet-to-be reported quarter’s results and beyond.
With regard to its guidance for the third quarter, the company projects sales in the range of $6–$6.1 billion, consistent with its prior guidance. On the bottom-line front, earnings per share from continuing operations are expected in the range of $1.57 to $1.62, lower than management’s prior guidance.
Further, the company expects to witness substantial improvement in its operating performance and in turn in its operating margin.
Among the highlights of the third quarter, Raytheon clinched a few significant contracts which include a $288 million one from the Navy for the supply of conversion, system overhaul and upgrade services as well as related hardware for MK 15 Close-In Weapon Systems. The company also won a $255 million deal for the Joint Precision Approach and Landing System (“JPALS”), another $98.1 million three-year contract for offering cyberspace technology integration with a potential value of $165.9 million and a $104 million subcontract to upgrade the ground segment for the U.S. Air Force RQ-4 Global Hawk autonomous aircraft.
For the third quarter, the Zacks Consensus Estimate for earnings is pegged at $1.64 a share, reflecting an increase of 11.34% year over year, while the consensus for revenues is $6.01 billion, implying a 4.01% year-over-year rise.
Earnings Whispers
Our proven model does not conclusively show that Raytheon is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Raytheon has an Earnings ESP of +1.22%.That is because while the Most Accurate estimate is pegged at $1.66, the Zacks Consensus Estimate is lower at $1.64. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Raytheon has a Zacks Rank #4 (Sell). Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a few stocks in the Aerospace and Defense space worth considering on the basis of our model which shows that they have the right combination to pull off a beat:
General Dynamics Corp. (GD - Free Report) has an earnings ESP of +0.84% and a Zacks Rank #3 (Hold). The company is scheduled to report quarterly results on Oct 26.
The Boeing Company (BA - Free Report) has an earnings ESP of +0.76% and a Zacks Rank #3. The company is expected to release results on Oct 26.
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Raytheon (RTN) to Report Q3 Earnings: What's in Store?
Defense prime Raytheon Company is scheduled to release third-quarter 2016 results on Oct 27, before the opening bell.
In the prior quarter, the company reported a positive earnings surprise of 2.94%. Notably, Raytheon outperformed the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 5.23%.
Let’s see how things are shaping up at the company prior to this announcement.
RAYTHEON CO Price and EPS Surprise
RAYTHEON CO Price and EPS Surprise | RAYTHEON CO Quote
Factors at Play
In its missile business, Raytheon continues to witness sustained improvement and the momentum is expected to be sustained over the next five years. In the international markets, a radar upgrade in Qatar represents a $1 billion opportunity for Raytheon which will get reflected in the yet-to-be reported quarter’s results and beyond.
With regard to its guidance for the third quarter, the company projects sales in the range of $6–$6.1 billion, consistent with its prior guidance. On the bottom-line front, earnings per share from continuing operations are expected in the range of $1.57 to $1.62, lower than management’s prior guidance.
Further, the company expects to witness substantial improvement in its operating performance and in turn in its operating margin.
Among the highlights of the third quarter, Raytheon clinched a few significant contracts which include a $288 million one from the Navy for the supply of conversion, system overhaul and upgrade services as well as related hardware for MK 15 Close-In Weapon Systems. The company also won a $255 million deal for the Joint Precision Approach and Landing System (“JPALS”), another $98.1 million three-year contract for offering cyberspace technology integration with a potential value of $165.9 million and a $104 million subcontract to upgrade the ground segment for the U.S. Air Force RQ-4 Global Hawk autonomous aircraft.
For the third quarter, the Zacks Consensus Estimate for earnings is pegged at $1.64 a share, reflecting an increase of 11.34% year over year, while the consensus for revenues is $6.01 billion, implying a 4.01% year-over-year rise.
Earnings Whispers
Our proven model does not conclusively show that Raytheon is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Raytheon has an Earnings ESP of +1.22%.That is because while the Most Accurate estimate is pegged at $1.66, the Zacks Consensus Estimate is lower at $1.64. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Raytheon has a Zacks Rank #4 (Sell). Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a few stocks in the Aerospace and Defense space worth considering on the basis of our model which shows that they have the right combination to pull off a beat:
General Dynamics Corp. (GD - Free Report) has an earnings ESP of +0.84% and a Zacks Rank #3 (Hold). The company is scheduled to report quarterly results on Oct 26.
Huntington Ingalls Industries, Inc. (HII - Free Report) , slated to report on Nov 3, has an earnings ESP of +2.09% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Boeing Company (BA - Free Report) has an earnings ESP of +0.76% and a Zacks Rank #3. The company is expected to release results on Oct 26.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>