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Raytheon Company reported third-quarter 2016 earnings from continuing operations of $1.79 per share, beating the Zacks Consensus Estimate of $1.64 by 9.1%. Earnings also increased 21.8% from the year-ago figure of $1.47.
Operational Performance
Third-quarter revenues of $6,033 million demonstrated 4.3% year-over-year growth. The reported number also surpassed the Zacks Consensus Estimate of $6,014.8 million by 0.3%.
Raytheon’s – a Zacks Rank #4 (Sell) stock – bookings in the quarter were $6,940 million compared with $5,315 million in the year-ago quarter, reflecting an increase of 30.6%. Total backlog at the end of the quarter was $35.81 billion, up from $33.57 billion a year ago. Meanwhile, funded backlog was $25.67 billion, up from $24.36 billion a year ago.
Total operating expenses increased 2.8% to $5,227 million. As a result, operating income improved 15.6% to $806 million from $697 million a year ago.
Integrated Defense Systems: Segment revenues decreased 6% year over year to $1,334 million, driven by lower net sales on various radar production programs and an international communications program. Segment operating income improved to $209 million from $198 million a year ago.
Intelligence, Information and Services: Segment revenues of $1,541 million were higher than the year-ago level of $1,519 million. Operating income in the reported quarter increased to $122 million from $118 million a year ago.
Missile Systems: Segment revenues grew 9% year over year to $1,800 million buoyed by higher sales on the Paveway and Advanced Medium-Range Air-to-Air Missile (AMRAAM) programs. Operating income jumped 10% to $241 million from $219 million a year ago.
Space and Airborne Systems: Revenues in the quarter grew 10% year over year to $1,590 million due to higher sales on an international classified program. Operating income dropped 1% to $210 million due to a change in the program mix.
Forcepoint: This commercial cybersecurity company generated net sales of $149 million in the third quarter, up 31%. The joint-venture entity registered an operating income of $19 million in the reported quarter.
Financial Update
Raytheon ended the third quarter with cash and cash equivalents of $2,342 million, up from $2,328 million as of Dec 31, 2015. Long-term debt was $5,334 million, up marginally from an outstanding debt of $5,330 million as of Dec 31, 2015.
Operating cash flow from continuing operations of $1,632 million as of Oct 2, 2016, up from $1,500 million a year ago.
In the third quarter, Raytheon repurchased 1.4 million shares of common stock for $198 million.
Guidance
Raytheon raised the upper limit of its 2016 revenue guidance. The company currently expects to revenues in the range of $24.2–$24.5 billion, compared to the earlier range of $24.0–$24.5 billion. Management also upgraded its earnings projection to the range of $7.28–$7.38 per share from $7.13−$7.33 for 2016.
The company continues to expect 2016 operating cash flow from continuing operations in the band of $2.8−$3.1 billion.
Recent Peer Releases
Lockheed Martin Corp. (LMT - Free Report) reported third-quarter 2016 earnings of $3.61 per share, surpassing the Zacks Consensus Estimate of $2.86 by 26.2%. Earnings also increased 49.2% from the year-ago level. It has a Zacks Rank #3 (Hold).
Rockwell Collins Inc. reported results for fourth-quarter fiscal 2016 ended Sep 30. The company’s adjusted earnings per share of $1.58, beating the Zacks Consensus Estimate of $1.57 by 0.6%. Reported earnings improved 14.5% from $1.38 a year ago. The company has a Zacks Rank #4.
Honeywell International Inc. (HON - Free Report) reported third-quarter 2016 adjusted earnings of $1.67 per share, comfortably beating both the Zacks Consensus Estimate and the year-ago equivalent figure of $1.60 by 4.4%. The stock carries a Zacks Rank #4.
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Raytheon (RTN) Beats Q3 Earnings Estimates; Raises View
Raytheon Company reported third-quarter 2016 earnings from continuing operations of $1.79 per share, beating the Zacks Consensus Estimate of $1.64 by 9.1%. Earnings also increased 21.8% from the year-ago figure of $1.47.
Operational Performance
Third-quarter revenues of $6,033 million demonstrated 4.3% year-over-year growth. The reported number also surpassed the Zacks Consensus Estimate of $6,014.8 million by 0.3%.
Raytheon’s – a Zacks Rank #4 (Sell) stock – bookings in the quarter were $6,940 million compared with $5,315 million in the year-ago quarter, reflecting an increase of 30.6%. Total backlog at the end of the quarter was $35.81 billion, up from $33.57 billion a year ago. Meanwhile, funded backlog was $25.67 billion, up from $24.36 billion a year ago.
Total operating expenses increased 2.8% to $5,227 million. As a result, operating income improved 15.6% to $806 million from $697 million a year ago.
RAYTHEON CO Price, Consensus and EPS Surprise
RAYTHEON CO Price, Consensus and EPS Surprise | RAYTHEON CO Quote
Quarterly Segment Performance
Integrated Defense Systems: Segment revenues decreased 6% year over year to $1,334 million, driven by lower net sales on various radar production programs and an international communications program. Segment operating income improved to $209 million from $198 million a year ago.
Intelligence, Information and Services: Segment revenues of $1,541 million were higher than the year-ago level of $1,519 million. Operating income in the reported quarter increased to $122 million from $118 million a year ago.
Missile Systems: Segment revenues grew 9% year over year to $1,800 million buoyed by higher sales on the Paveway and Advanced Medium-Range Air-to-Air Missile (AMRAAM) programs. Operating income jumped 10% to $241 million from $219 million a year ago.
Space and Airborne Systems: Revenues in the quarter grew 10% year over year to $1,590 million due to higher sales on an international classified program. Operating income dropped 1% to $210 million due to a change in the program mix.
Forcepoint: This commercial cybersecurity company generated net sales of $149 million in the third quarter, up 31%. The joint-venture entity registered an operating income of $19 million in the reported quarter.
Financial Update
Raytheon ended the third quarter with cash and cash equivalents of $2,342 million, up from $2,328 million as of Dec 31, 2015. Long-term debt was $5,334 million, up marginally from an outstanding debt of $5,330 million as of Dec 31, 2015.
Operating cash flow from continuing operations of $1,632 million as of Oct 2, 2016, up from $1,500 million a year ago.
In the third quarter, Raytheon repurchased 1.4 million shares of common stock for $198 million.
Guidance
Raytheon raised the upper limit of its 2016 revenue guidance. The company currently expects to revenues in the range of $24.2–$24.5 billion, compared to the earlier range of $24.0–$24.5 billion. Management also upgraded its earnings projection to the range of $7.28–$7.38 per share from $7.13−$7.33 for 2016.
The company continues to expect 2016 operating cash flow from continuing operations in the band of $2.8−$3.1 billion.
Recent Peer Releases
Lockheed Martin Corp. (LMT - Free Report) reported third-quarter 2016 earnings of $3.61 per share, surpassing the Zacks Consensus Estimate of $2.86 by 26.2%. Earnings also increased 49.2% from the year-ago level. It has a Zacks Rank #3 (Hold).
Rockwell Collins Inc. reported results for fourth-quarter fiscal 2016 ended Sep 30. The company’s adjusted earnings per share of $1.58, beating the Zacks Consensus Estimate of $1.57 by 0.6%. Reported earnings improved 14.5% from $1.38 a year ago. The company has a Zacks Rank #4.
Honeywell International Inc. (HON - Free Report) reported third-quarter 2016 adjusted earnings of $1.67 per share, comfortably beating both the Zacks Consensus Estimate and the year-ago equivalent figure of $1.60 by 4.4%. The stock carries a Zacks Rank #4.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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