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Raytheon Company (RTN) Q4 Earnings: A Beat in the Cards?
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Defense prime Raytheon Company is scheduled to release fourth-quarter and full-year 2016 results on Jan 26, before the opening bell.
In the prior quarter, the company reported a positive earnings surprise of 9.15%. Notably, Raytheon outperformed the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 6.27%.
Let’s see how things are shaping up at the company prior to this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Raytheon is likely to beat earnings because it has the perfect combination of two key ingredients.
Zacks ESP: Raytheon has an Earnings ESP of +2.15%. That is because while the Most Accurate estimate is pegged at $1.90, the Zacks Consensus Estimate is lower at $1.86. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Raytheon currently carries a Zacks Rank #3 (Hold).
Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings. Conversely, Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement, especially when the company is witnessing negative estimate revisions.
The company’s Zacks Rank #3 and positive ESP make us reasonably confident of an earnings beat.
What is Driving the Better-than-Expected Earnings?
Raytheon continues to retain its position as one of the large-cap defense giants in the U.S., thanks to its non-platform-centric focus. Strong demand for the company’s advanced technologies from global customers as well as solid domestic bookings hint at an encouraging yet-to-be-reported quarter.
With regard to its guidance for the fourth quarter, the company continues to expect sales in the range of $6.4–$6.7 billion. On the bottom-line front, management has raised its projection to the band of $1.68–$1.78 per share, reflecting the timing of performance improvement.
With respect to the 2016 guidance, the company raised its revenue expectation to the range of $24.2–$24.5 billion, compared to the earlier $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.
In particular, the raised sales expectation reflects growth in both domestic and international businesses. Further, management expects to witness slightly higher pension income and lower interest expense, which should boost the bottom line. In addition, a substantial improvement in bookings is expected in the quarter.
Among the highlights of the fourth quarter, Raytheon clinched a few significant contracts which include a $459 million foreign military sales (FMS) deal for full-rate production of VINSON/Advanced Narrowband Digital Voice Terminal (ANDVT) Cryptographic Modernization (VACM) program as well as a $304 million Navy deal to procure Tomahawk Block IV All-Up-Round vertical launch system missiles and spares. The company also clinched a $163 million deal from the Army to provide training services to Qatar, a $110 million Navy modification contract for the Air and Missile Defense Radar Program (AMDR) S-Band Radar (ADMR-S) and the Radar Suite Controller (RSC); and a $102 million deal for supporting the repair of 10 weapon replaceable assemblies for the AN/ALR-67(V)3 on the F/A-18 A/B/C/D/E/F aircraft..
For the fourth quarter, the Zacks Consensus Estimate for earnings is pegged at $1.86 a share, reflecting a decrease of 3.68% year over year, while the consensus for revenues is $6.51 billion, implying a 2.95% year-over-year rise.
Price Movement
Raytheon gained about 7.9% in the last three months, above the Zacks categorized Aerospace-Defense Equipment industry’s gain of 7.5%. This is probably because of the rising demand for the company’s defense equipment, its strong presence in areas of Intelligence, Surveillance and Reconnaissance (ISR) as well as solid cash balance position.
Stocks that Warrant a Look
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:
Northrop Grumman Corporation (NOC - Free Report) is slated to release fourth-quarter 2016 results on Jan 26. The company has an Earnings ESP of +0.80% and a Zacks Rank #2.
L3 Technologies, Inc. is scheduled to report fourth-quarter 2016 results on Jan 26. The company has an Earnings ESP of +2.36% and a Zacks Rank #3 (Hold).
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research.See these stocks free >>
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Raytheon Company (RTN) Q4 Earnings: A Beat in the Cards?
Defense prime Raytheon Company is scheduled to release fourth-quarter and full-year 2016 results on Jan 26, before the opening bell.
In the prior quarter, the company reported a positive earnings surprise of 9.15%. Notably, Raytheon outperformed the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 6.27%.
Let’s see how things are shaping up at the company prior to this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Raytheon is likely to beat earnings because it has the perfect combination of two key ingredients.
Zacks ESP: Raytheon has an Earnings ESP of +2.15%. That is because while the Most Accurate estimate is pegged at $1.90, the Zacks Consensus Estimate is lower at $1.86. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Raytheon currently carries a Zacks Rank #3 (Hold).
Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings. Conversely, Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement, especially when the company is witnessing negative estimate revisions.
The company’s Zacks Rank #3 and positive ESP make us reasonably confident of an earnings beat.
Raytheon Co. Price and EPS Surprise
Raytheon Co. Price and EPS Surprise | Raytheon Co. Quote
What is Driving the Better-than-Expected Earnings?
Raytheon continues to retain its position as one of the large-cap defense giants in the U.S., thanks to its non-platform-centric focus. Strong demand for the company’s advanced technologies from global customers as well as solid domestic bookings hint at an encouraging yet-to-be-reported quarter.
With regard to its guidance for the fourth quarter, the company continues to expect sales in the range of $6.4–$6.7 billion. On the bottom-line front, management has raised its projection to the band of $1.68–$1.78 per share, reflecting the timing of performance improvement.
With respect to the 2016 guidance, the company raised its revenue expectation to the range of $24.2–$24.5 billion, compared to the earlier $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.
In particular, the raised sales expectation reflects growth in both domestic and international businesses. Further, management expects to witness slightly higher pension income and lower interest expense, which should boost the bottom line. In addition, a substantial improvement in bookings is expected in the quarter.
Among the highlights of the fourth quarter, Raytheon clinched a few significant contracts which include a $459 million foreign military sales (FMS) deal for full-rate production of VINSON/Advanced Narrowband Digital Voice Terminal (ANDVT) Cryptographic Modernization (VACM) program as well as a $304 million Navy deal to procure Tomahawk Block IV All-Up-Round vertical launch system missiles and spares. The company also clinched a $163 million deal from the Army to provide training services to Qatar, a $110 million Navy modification contract for the Air and Missile Defense Radar Program (AMDR) S-Band Radar (ADMR-S) and the Radar Suite Controller (RSC); and a $102 million deal for supporting the repair of 10 weapon replaceable assemblies for the AN/ALR-67(V)3 on the F/A-18 A/B/C/D/E/F aircraft..
For the fourth quarter, the Zacks Consensus Estimate for earnings is pegged at $1.86 a share, reflecting a decrease of 3.68% year over year, while the consensus for revenues is $6.51 billion, implying a 2.95% year-over-year rise.
Price Movement
Raytheon gained about 7.9% in the last three months, above the Zacks categorized Aerospace-Defense Equipment industry’s gain of 7.5%. This is probably because of the rising demand for the company’s defense equipment, its strong presence in areas of Intelligence, Surveillance and Reconnaissance (ISR) as well as solid cash balance position.
Stocks that Warrant a Look
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:
Huntington Ingalls Industries, Inc. (HII - Free Report) is expected to report fourth-quarter 2016 results on Feb 16. The company has an Earnings ESP of +2.82% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Northrop Grumman Corporation (NOC - Free Report) is slated to release fourth-quarter 2016 results on Jan 26. The company has an Earnings ESP of +0.80% and a Zacks Rank #2.
L3 Technologies, Inc. is scheduled to report fourth-quarter 2016 results on Jan 26. The company has an Earnings ESP of +2.36% and a Zacks Rank #3 (Hold).
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research.See these stocks free >>