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Will Missile Systems Unit Drive Raytheon (RTN) Q1 Earnings?
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Raytheon Company is scheduled to release first-quarter 2018 results on Apr 26, before the opening bell.
The company’s revenues are anticipated to be primarily driven by Missile Systems business unit’s performance in the quarter under review. Moreover, we expect the upcoming result to reflect solid cash flow numbers.
Let’s take a detailed look at the factors influencing Raytheon’s quarterly results.
Missile Systems Unit Driving Growth
Segment-wise, Missile Systems business unit that represent more than 30% of the company’s total business sales continues to be a major growth driver. Keeping this trend, Raytheon is poised to benefit from this unit in the first quarter as well.
Notably, the company won a modification contract worth $523 million for production of Advanced Medium Range Air to Air Missile’s (AMRAAM) 31st Lot, and a foreign military sales contract worth $150 million for providing staffing and training services to support the Qatar Patriot Air Defense Missile Systems in the quarter under review.
Raytheon also won a $2.3 billion hybrid contract for providing engineering services to the Phased Array Tracking Radar Intercept on Target (PATRIOT) weapon systems program. Again, around the end of the quarter, it secured a $4.8 billion deal to deliver Patriot Missile Systems to Poland, which turned out to be Poland’s biggest arms deal till date. Surely these order flows will boost Missile Systems unit’s top line in the quarter.
In sync with this, the Zacks Consensus Estimate for first-quarter sales is pegged at $1,909 million for the segment, reflecting year-over-year growth of 7.7%.
In March 2018, Raytheon’s board of directors approved a hike in annual dividend of 8.8%, marking the 14th consecutive annual dividend increase by the company.A steady dividend payout policy primarily mirrors Raytheon’s robust financial position and balanced capital deployment strategy. In fact, an increase in dividend at regular intervals has been one of the characteristic features of this defense major.
Raytheon ended fourth-quarter 2017 with operating cash flow from continuing operations of $1.6 billion, reflecting an increase of 45.4% year over year. We may expect the soon-to-be reported results to reflect similar solid cash flow performance by the company.
Other Factors at Play
Apart from winning contracts for its Missile Systems business unit, Raytheon’s other segments also secured notable contracts from Pentagon. As a result, the Zacks Consensus Estimate for other segments also reflected annual sales growth. Buoyed by such solid sales expectations for each of its segments, the consensus estimate for first-quarter total sales is $6.17 billion, representing an annual improvement of 2.9%.
On the bottom-line front, lower tax expenses and in-line interest expenses are expected to provide an impetus to the company. In line with this, the consensus mark for Raytheon’s first -quarter earnings of $2.10per share reflects a year-over-year improvement of 21.4%
What Does the Zacks Model Unveil?
Our proven model shows that Raytheon is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.
Zacks ESP: Raytheon has an Earnings ESP of +1.91%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks to Consider
Here are a few companies in the Aerospace-Defense space that have the right combination of elements to post an earnings beat this quarter.
Boeing (BA - Free Report) is expected to report first-quarter results on Apr 25. The company has an Earnings ESP of +1.70% and a Zacks Rank #2.
Embraer S.A. (ERJ - Free Report) has an Earnings ESP of +450.00% and a Zacks Rank #3. The company is slated to release first-quarter results on Apr 27.
Rockwell Collins is expected to report second-quarter fiscal 2018 results on Apr 27. The company has an Earnings ESP of +0.19% and a Zacks Rank #2.
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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Will Missile Systems Unit Drive Raytheon (RTN) Q1 Earnings?
Raytheon Company is scheduled to release first-quarter 2018 results on Apr 26, before the opening bell.
The company’s revenues are anticipated to be primarily driven by Missile Systems business unit’s performance in the quarter under review. Moreover, we expect the upcoming result to reflect solid cash flow numbers.
Let’s take a detailed look at the factors influencing Raytheon’s quarterly results.
Missile Systems Unit Driving Growth
Segment-wise, Missile Systems business unit that represent more than 30% of the company’s total business sales continues to be a major growth driver. Keeping this trend, Raytheon is poised to benefit from this unit in the first quarter as well.
Notably, the company won a modification contract worth $523 million for production of Advanced Medium Range Air to Air Missile’s (AMRAAM) 31st Lot, and a foreign military sales contract worth $150 million for providing staffing and training services to support the Qatar Patriot Air Defense Missile Systems in the quarter under review.
Raytheon also won a $2.3 billion hybrid contract for providing engineering services to the Phased Array Tracking Radar Intercept on Target (PATRIOT) weapon systems program. Again, around the end of the quarter, it secured a $4.8 billion deal to deliver Patriot Missile Systems to Poland, which turned out to be Poland’s biggest arms deal till date. Surely these order flows will boost Missile Systems unit’s top line in the quarter.
In sync with this, the Zacks Consensus Estimate for first-quarter sales is pegged at $1,909 million for the segment, reflecting year-over-year growth of 7.7%.
Raytheon Company Price and EPS Surprise
Raytheon Company Price and EPS Surprise | Raytheon Company Quote
Dividend Hike: A Solid Cash Story
In March 2018, Raytheon’s board of directors approved a hike in annual dividend of 8.8%, marking the 14th consecutive annual dividend increase by the company.A steady dividend payout policy primarily mirrors Raytheon’s robust financial position and balanced capital deployment strategy. In fact, an increase in dividend at regular intervals has been one of the characteristic features of this defense major.
Raytheon ended fourth-quarter 2017 with operating cash flow from continuing operations of $1.6 billion, reflecting an increase of 45.4% year over year. We may expect the soon-to-be reported results to reflect similar solid cash flow performance by the company.
Other Factors at Play
Apart from winning contracts for its Missile Systems business unit, Raytheon’s other segments also secured notable contracts from Pentagon. As a result, the Zacks Consensus Estimate for other segments also reflected annual sales growth. Buoyed by such solid sales expectations for each of its segments, the consensus estimate for first-quarter total sales is $6.17 billion, representing an annual improvement of 2.9%.
On the bottom-line front, lower tax expenses and in-line interest expenses are expected to provide an impetus to the company. In line with this, the consensus mark for Raytheon’s first -quarter earnings of $2.10per share reflects a year-over-year improvement of 21.4%
What Does the Zacks Model Unveil?
Our proven model shows that Raytheon is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.
Zacks ESP: Raytheon has an Earnings ESP of +1.91%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Raytheon carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks to Consider
Here are a few companies in the Aerospace-Defense space that have the right combination of elements to post an earnings beat this quarter.
Boeing (BA - Free Report) is expected to report first-quarter results on Apr 25. The company has an Earnings ESP of +1.70% and a Zacks Rank #2.
Embraer S.A. (ERJ - Free Report) has an Earnings ESP of +450.00% and a Zacks Rank #3. The company is slated to release first-quarter results on Apr 27.
Rockwell Collins is expected to report second-quarter fiscal 2018 results on Apr 27. The company has an Earnings ESP of +0.19% and a Zacks Rank #2.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>