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Raytheon Company (RTN - Analyst Report) is set to clinch a $2.1 billion arms deal to sell Oman an air defense system during the U.S. Secretary of State John Kerry’s visit in the Gulf state this week.

Although the terms of the latest agreement and the deal value are yet to be finalized, this agreement is expected to help Oman to protect against unmanned-aerial vehicles and cruise missiles attacks.

One of the leading U.S. weapons manufacturers, Raytheon draws a significant portion of its revenue from international sales, more than any other major U.S. weapons maker. The company expects a 20% surge in international bookings this year.

The company’s international opportunities encompass the Kuwait Patriot, the Oman ground-based air defense system, the Qatar air defense system, air traffic management, as well as radars and missiles. With the finalization of the Oman deal, Raytheon seems to be well on-track with these opportunities.

We also remain optimistic on the firm’s near-term prospects, supported by its newly realigned segments, effective cash deployment strategy and growing cash flow, and operational improvements.

In fact, on Apr 25, 2013 Raytheon successfully beat the first quarter 2013 earnings by almost 22%. The reported number was also 5.4% higher than the year-ago figure. The upside was driven by strong program execution.

We believe that Raytheon is one of the best-positioned companies among the large-cap defense players due to its non-platform-centric focus, rising international sales, substantial presence in the classified market, strong order bookings and order backlog, strong cash flow generation and focus on shareholder value.

During the first quarter, the company repurchased 4.2 million shares for $225 million as a part of its previously announced share repurchase program. Also, Raytheon increased its quarterly dividend by 10%, bringing the quarterly dividend to 55 cents (annualized $2.20 per share) from the previous payout of 50 cents (annualized $2.00 per share).

Raytheon retains a Zacks Rank #3 (Hold), implying that it is expected to trade in line with the broader U.S. equity market over the next one to three months.

There are other companies in the sector like B/E Aerospace Inc. (BEAV - Snapshot Report), Wesco Aircraft Holdings, Inc. (WAIR - Snapshot Report) and Northrop Grumman Corp. (NOC - Analyst Report) that offer great value and are worth buying now. All these firms sport a Zacks Rank #2 (Buy).

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