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Raytheon (RTN) Beats Q4 Earnings Estimates, Gives '17 View (Revised)

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Raytheon Company reported fourth-quarter 2016 adjusted earnings from continuing operations of $1.88 per share, beating the Zacks Consensus Estimate of $1.86 by 1.1%. 

In 2016, earnings from continuing operations came in at $7.55, up 11.7% from $6.76 in the year-ago period.

 

Operational Performance

The company’s fourth-quarter revenues of $6,238 million saw a 1.4% year-over-year fall. The reported number also missed the Zacks Consensus Estimate of $6,515 million by 4.2%.

Revenues for full-year 2016 stood at $24 billion, up from $23.2 billion in 2015.

The company’s bookings in the fourth quarter were $7,577 million compared with $7,861 million in the year-ago quarter, reflecting a decrease of 3.6%. Total backlog at the end of the quarter was $36.9 billion, up from $34.7 billion at 2015-end. Funded backlog was $25.6 billion, up from $25.1 billion at 2015-end.

Total operating expenses contracted 2.2% to $5,376 million. Operating income of $862 million rose 4.1% from $828 million a year ago.

Segmental Performance

Integrated Defense Systems: Segment revenues fell 9.7% year over year to $1,406 million due to lower sales on the Air Warfare Destroyer (AWD) program and an international communications program. Operating income declined 22% to $219 million, thanks to decreased volume.

Intelligence, Information and Services: Segment revenues of $1,518 million were lower than the year-ago level of $1,537 million. Operating income in the reported quarter rose 9% to $121 million from $111 million a year ago, primarily driven by higher net program efficiencies.

Missile Systems: Segment revenues grew to $1,895 million from $1,879 million a year ago, buoyed by higher sales of Paveway. Operating income increased to $260 million from $258 million a year ago.

Space and Airborne Systems: Revenues in the quarter inched up 2.2% year over year to $1,612 million. Operating income decreased 3.3% to $231 million due to a change in program mix.

Forcepoint: The commercial cybersecurity company generated net sales of $143 million in the fourth quarter, up from $133 million a year ago. The joint-venture entity registered operating income of $11 million in the reported quarter, at par with the year-ago figure.

Raytheon Company Price, Consensus and EPS Surprise

 

Raytheon Company Price, Consensus and EPS Surprise | Raytheon Company Quote

Financial Update

Raytheon ended the fourth quarter with cash and cash equivalents of $3,303 million, up from $2,328 million as of Dec 31, 2015. Long-term debt was $5,335 million, up from outstanding debt of $5,330 million as of Dec 31, 2015.

Operating cash flow from continuing operations of $1,141 million in the quarter increased 40.3% year over year.

In the fourth quarter, Raytheon repurchased 0.7 million shares of common stock for $100 million.

Guidance                                                                                                                      

Raytheon expects 2017 revenues in the range of $24.8 billion to $25.3 billion. It expects earnings from continuing operations at around $7.20−$7.35 per share.

The company projects 2017 operating cash flow from continuing operations at approximately $2.8−$3.1 billion.

Peer Releases

Lockheed Martin Corp. (LMT - Free Report) reported fourth-quarter 2016 earnings from continuing operations of $3.25 per share, surpassing the Zacks Consensus Estimate of $3.04 by 6.9%.

The Boeing Co. (BA - Free Report)   reported adjusted earnings of $2.47 per share for fourth-quarter 2016, beating the Zacks Consensus Estimate of $2.34 by 5.6%.

Textron Inc. (TXT - Free Report) reported fourth-quarter 2016 adjusted earnings from continuing operations of 80 cents per share, missing the Zacks Consensus Estimate of 87 cents by 8%.

Zacks Rank

Raytheon currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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(Disclaimer: We are reissuing this article to correct a mistake. The original article, issued on Jan 26, 2017, should no longer be relied upon.)


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