A month has gone by since the last earnings report for Raytheon Company . Shares have added about 4.5% in the past month, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Raytheon Beats Q1 Earnings Estimates, Ups '17 View
Raytheon reported first-quarter 2017 adjusted earnings from continuing operations of $1.73 per share, beating the Zacks Consensus Estimate of $1.61 by 7.5%. The figure also improved 21% from $1.43 in the year-ago quarter.
Operational Performance
The company’s first-quarter revenues of $6,000 million saw a 3.4% year-over-year growth. The reported number also surpassed the Zacks Consensus Estimate of $5,843 million by 2.7%.
Raytheon’s bookings in the first quarter were $5,688 million compared with $6,201 million in the year-ago quarter, reflecting a decrease of 8.3%. Total backlog at the end of the quarter was $36.1 billion, down from $36.8 billion at 2016-end.
Total operating expenses contracted 1.3% to $5,259 million. However, operating income of $741 million rose 20.9% from $613 million a year ago.
Segmental Performance
Integrated Defense Systems:The segment’s revenues grew 4.6% year over year to $1,398 million due to higher sales on an international early warning radar program awarded in the first quarter. Operating income increased 45.2% to $212 million, on the back of higher net program efficiencies and a favorable change in program mix.
Intelligence, Information and Services:The segment’s revenues of $1,507 million were lower than the year-ago level of $1,532 million. Operating income in the reported quarter rose 6.7% to $111 million from $104 million a year ago, primarily driven by a favorable change in program mix.
Missile Systems:Segment revenues grew to $1,756 million from $1,723 million a year ago. Operating income increased to $216 million from $192 million a year ago.
Space and Airborne Systems:Revenues in the quarter improved 7.6% year over year to $1,555 million. Operating income increased 13.8% to $190 million due to a change in program mix and higher volume.
Forcepoint:This commercial cyber-security segment generated net sales of $144 million in the first quarter, up from $139 million a year ago. The joint-venture entity registered operating income of $16 million in the reported quarter, down from the year-ago figure of $18 million.
Financial Update
Raytheon ended the first quarter with cash and cash equivalents of $2,186 million, down from $3,303 million as of Dec 31, 2016. Long-term debt was $5,086 million, down from outstanding debt of $5,335 million as of Dec 31, 2016.
Operating cash outflow from continuing operations was $41 million in the quarter compared with cash inflow of $326 million in the year-ago quarter.
In the reported quarter, Raytheon repurchased 2.7 million shares of common stock for $400 million.
Guidance
Raytheon expects 2017 revenues in the range of $24.9 billion to $25.4 billion, up from the prior guidance range of $24.8 billion to $25.3 billion. It now expects earnings from continuing operations at around $7.25−$7.40 per share, up from the $7.20-$7.35 band.
The company still projects 2017 operating cash flow from continuing operations at approximately $2.8-$3.1 billion.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, Raytheon's stock has an average score of 'C' on both growth and momentum front. Charting a somewhat similar path, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for growth investors while also being suitable for momentum and value investors.
Outlook
The stock has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Raytheon (RTN) Up 4.5% Since Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Raytheon Company . Shares have added about 4.5% in the past month, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Raytheon Beats Q1 Earnings Estimates, Ups '17 View
Raytheon reported first-quarter 2017 adjusted earnings from continuing operations of $1.73 per share, beating the Zacks Consensus Estimate of $1.61 by 7.5%. The figure also improved 21% from $1.43 in the year-ago quarter.
Operational Performance
The company’s first-quarter revenues of $6,000 million saw a 3.4% year-over-year growth. The reported number also surpassed the Zacks Consensus Estimate of $5,843 million by 2.7%.
Raytheon’s bookings in the first quarter were $5,688 million compared with $6,201 million in the year-ago quarter, reflecting a decrease of 8.3%. Total backlog at the end of the quarter was $36.1 billion, down from $36.8 billion at 2016-end.
Total operating expenses contracted 1.3% to $5,259 million. However, operating income of $741 million rose 20.9% from $613 million a year ago.
Segmental Performance
Integrated Defense Systems:The segment’s revenues grew 4.6% year over year to $1,398 million due to higher sales on an international early warning radar program awarded in the first quarter. Operating income increased 45.2% to $212 million, on the back of higher net program efficiencies and a favorable change in program mix.
Intelligence, Information and Services:The segment’s revenues of $1,507 million were lower than the year-ago level of $1,532 million. Operating income in the reported quarter rose 6.7% to $111 million from $104 million a year ago, primarily driven by a favorable change in program mix.
Missile Systems:Segment revenues grew to $1,756 million from $1,723 million a year ago. Operating income increased to $216 million from $192 million a year ago.
Space and Airborne Systems:Revenues in the quarter improved 7.6% year over year to $1,555 million. Operating income increased 13.8% to $190 million due to a change in program mix and higher volume.
Forcepoint:This commercial cyber-security segment generated net sales of $144 million in the first quarter, up from $139 million a year ago. The joint-venture entity registered operating income of $16 million in the reported quarter, down from the year-ago figure of $18 million.
Financial Update
Raytheon ended the first quarter with cash and cash equivalents of $2,186 million, down from $3,303 million as of Dec 31, 2016. Long-term debt was $5,086 million, down from outstanding debt of $5,335 million as of Dec 31, 2016.
Operating cash outflow from continuing operations was $41 million in the quarter compared with cash inflow of $326 million in the year-ago quarter.
In the reported quarter, Raytheon repurchased 2.7 million shares of common stock for $400 million.
Guidance
Raytheon expects 2017 revenues in the range of $24.9 billion to $25.4 billion, up from the prior guidance range of $24.8 billion to $25.3 billion. It now expects earnings from continuing operations at around $7.25−$7.40 per share, up from the $7.20-$7.35 band.
The company still projects 2017 operating cash flow from continuing operations at approximately $2.8-$3.1 billion.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Raytheon Company Price and Consensus
Raytheon Company Price and Consensus | Raytheon Company Quote
VGM Scores
At this time, Raytheon's stock has an average score of 'C' on both growth and momentum front. Charting a somewhat similar path, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for growth investors while also being suitable for momentum and value investors.
Outlook
The stock has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.