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Will Higher Sales Volume Drive Raytheon's (RTN) Q4 Earnings?
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Raytheon Company is scheduled to release fourth quarter and 2018 results on Jan 31, before the opening bell.
The company's revenues are anticipated to be driven by a consistent order inflow, which along with lower taxes are likely to benefit its earnings in the to-be-reported quarter. Last reported quarter, the company delivered a positive earnings surprise of 15.98%.
Let's take a closer look at the factors influencing Raytheon's quarterly results.
Why a Likely Positive Earnings Surprise
Our proven model shows a likely earnings beat for Raytheon this quarter. That 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. This is the case here as you will see below.
Earnings ESP: Raytheon has an Earnings ESP of +1.78%. 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, which when combined with a positive ESP makes us confident of probable earnings beat.
Note that we caution against stocks with a Zacks Rank #4 or 5 going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Over the last few quarters, Raytheon’s Missile Systems (MS) business unit that represents almost 30% of the company's total sales continues to be one of the major revenue drivers. Keeping this trend alive, Raytheon is poised to benefit from this unit in the fourth quarter as well. In line with this, the Zacks Consensus Estimate for the MS segment’s fourth-quarter sales is pegged at $2,479 million, reflecting year-over-year growth of 13.5%.
During the quarter, the MS segment successfully secured some major contracts from both the Pentagon and its overseas customers. Notably, it secured a $692.9-billion contract for the production of Sweden's Patriot Integrated Air and Missile Defense System, including spare parts, support and training along with a $434-million deal for the production of 766 AIM-9X and 160 AIM-9X Block II+ missiles.
Moreover, the Romanian government signed an agreement with the U.S. Army for purchasing three additional Patriot Missiles. Such impressive order inflows should boost this unit’s backlog, which we expect to get reflected in the to-be-reported quarterly results.
Other Factors Under Consideration
Increased sales volume expectation for other segments of the company has made us optimistic about Raytheon’s top-line growth in the fourth quarter. Notably, the Zacks Consensus Estimate for its fourth-quarter revenues is pegged at $7,502 million, reflecting year-over-year improvement of 10.6%.
Fourth-quarter results are expected to maintain the solid bookings trend of the first three quarters of 2018.
Solid revenue growth and lower tax rate are expected to boost Raytheon’s bottom line in the fourth quarter. Moreover, favorable FAS/CAS Operating Adjustment and the retirement benefits non-service expenses are projected to benefit the company’s earnings this time. To this end, the Zacks Consensus Estimate for Raytheon's fourth-quarter earnings pegged at $2.89 reflects year-over-year surge of 42.4%.
Other Stocks That Warrant a Look
Here are a few more companies in the Zacks Aerospace Sector that have the right combination of elements to post an earnings beat this quarter.
General Dynamics Corp. (GD - Free Report) is expected to report fourth-quarter 2018 results on Jan 30. The company has an Earnings ESP of +1.49% and a Zacks Rank #3.
Huntington Ingalls Industries (HII - Free Report) is expected to report fourth-quarter 2018 results on Feb 14. The company has an Earnings ESP of +7.09% and a Zacks Rank #3.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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Will Higher Sales Volume Drive Raytheon's (RTN) Q4 Earnings?
Raytheon Company is scheduled to release fourth quarter and 2018 results on Jan 31, before the opening bell.
The company's revenues are anticipated to be driven by a consistent order inflow, which along with lower taxes are likely to benefit its earnings in the to-be-reported quarter. Last reported quarter, the company delivered a positive earnings surprise of 15.98%.
Let's take a closer look at the factors influencing Raytheon's quarterly results.
Why a Likely Positive Earnings Surprise
Our proven model shows a likely earnings beat for Raytheon this quarter. That 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. This is the case here as you will see below.
Earnings ESP: Raytheon has an Earnings ESP of +1.78%. 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, which when combined with a positive ESP makes us confident of probable earnings beat.
Note that we caution against stocks with a Zacks Rank #4 or 5 going into the earnings announcement, especially when the company is
seeing negative estimate revisions.
Raytheon Company Price and EPS Surprise
Raytheon Company Price and EPS Surprise | Raytheon Company Quote
Missile Systems: A Key Catalyst:
Over the last few quarters, Raytheon’s Missile Systems (MS) business unit that represents almost 30% of the company's total sales continues to be one of the major revenue drivers. Keeping this trend alive, Raytheon is poised to benefit from this unit in the fourth quarter as well. In line with this, the Zacks Consensus Estimate for the MS segment’s fourth-quarter sales is pegged at $2,479 million, reflecting year-over-year growth of 13.5%.
During the quarter, the MS segment successfully secured some major contracts from both the Pentagon and its overseas customers. Notably, it secured a $692.9-billion contract for the production of Sweden's Patriot Integrated Air and Missile Defense System, including spare parts, support and training along with a $434-million deal for the production of 766 AIM-9X and 160 AIM-9X Block II+ missiles.
Moreover, the Romanian government signed an agreement with the U.S. Army for purchasing three additional Patriot Missiles. Such impressive order inflows should boost this unit’s backlog, which we expect to get reflected in the to-be-reported quarterly results.
Other Factors Under Consideration
Increased sales volume expectation for other segments of the company has made us optimistic about Raytheon’s top-line growth in the fourth quarter. Notably, the Zacks Consensus Estimate for its fourth-quarter revenues is pegged at $7,502 million, reflecting year-over-year improvement of 10.6%.
Fourth-quarter results are expected to maintain the solid bookings trend of the first three quarters of 2018.
Solid revenue growth and lower tax rate are expected to boost Raytheon’s bottom line in the fourth quarter. Moreover, favorable FAS/CAS Operating Adjustment and the retirement benefits non-service expenses are projected to benefit the company’s earnings this time. To this end, the Zacks Consensus Estimate for Raytheon's fourth-quarter earnings pegged at $2.89 reflects year-over-year surge of 42.4%.
Other Stocks That Warrant a Look
Here are a few more companies in the Zacks Aerospace Sector that have the right combination of elements to post an earnings beat this quarter.
Lockheed Martin Corp. (LMT - Free Report) is expected to report fourth-quarter 2018 results on Jan 29. The company has an Earnings ESP of +4.20% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
General Dynamics Corp. (GD - Free Report) is expected to report fourth-quarter 2018 results on Jan 30. The company has an Earnings ESP of +1.49% and a Zacks Rank #3.
Huntington Ingalls Industries (HII - Free Report) is expected to report fourth-quarter 2018 results on Feb 14. The company has an Earnings ESP of +7.09% and a
Zacks Rank #3.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
See Latest Stocks Today >>