Back to top

Analyst Blog

Raytheon Company (RTN - Analyst Report) has kept its focus on shareholder value through regular dividend payouts and share repurchases. In line with this policy, the company authorized the repurchase of up to an additional $2.0 billion of its outstanding common stock.

The company declared a quarterly cash dividend of 43 cents per outstanding share of common stock. The cash dividend is payable on November 3, 2011 to shareholders of record as of the close of business on October 5, 2011.

Raytheon s strong balance sheet provides financial flexibility in matters of incremental dividend, ongoing share repurchases and earnings accretive acquisitions. As of July 3, 2011, with a low long-term debt-to-capitalization of 24.5% (Zacks industry average was 93.8%); long-term debt was $3.6 billion supported with cash holdings of $2.1 billion and credit facilities close to $1.5 billion.

Also, total debt was mainly in the form of fixed rate instruments. During the first half of 2011, the company repurchased 12.5 million shares for $625 million. Also in March 2011, the company raised its regular quarterly dividend by 15% from $0.375 to $0.43 per share.

Raytheon is one of the best-positioned companies among the large-cap defense players because of its non-platform-centric focus. Revenue and earnings growth continue to be driven by a strong presence in the areas of Intelligence, Surveillance and Reconnaissance, air & missile defense systems, border security, air traffic management, training and homeland security, and cyber security.

Looking forward, the company enjoys strong order bookings and order backlog, an improving balance sheet, growing cash flow, and operational improvements.

These positives are, however, offset by apprehensions over future growth of the U.S. defense budget, the fate of high-cost programs, risks related to key project executions and order cancellations. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.

Based in Massachusetts, Raytheon Company is a technology and innovation leader specializing in defense, homeland security and other government markets throughout the world. The company provides state-of-the-art electronics, mission systems integration and other capabilities in the areas of sensing; effects; and command, control, communications and intelligence systems, as well as a broad range of mission support services. The company mainly competes with L-3 Communications Holdings Inc. (LLL - Analyst Report) and Arotech Corporation (ARTX).

Please login to Zacks.com or register to post a comment.