Back to top

Raytheon (RTN) Beats Q3 Earnings Estimates; Raises View

Read MoreHide Full Article

Raytheon Company (RTN - Free Report) reported third-quarter 2016 earnings from continuing operations of $1.79 per share, beating the Zacks Consensus Estimate of $1.64 by 9.1%. Earnings also increased 21.8% from the year-ago figure of $1.47.

Operational Performance

Third-quarter revenues of $6,033 million demonstrated 4.3% year-over-year growth. The reported number also surpassed the Zacks Consensus Estimate of $6,014.8 million by 0.3%.

Raytheon’s – a Zacks Rank #4 (Sell) stock – bookings in the quarter were $6,940 million compared with $5,315 million in the year-ago quarter, reflecting an increase of 30.6%. Total backlog at the end of the quarter was $35.81 billion, up from $33.57 billion a year ago. Meanwhile, funded backlog was $25.67 billion, up from $24.36 billion a year ago.

Total operating expenses increased 2.8% to $5,227 million. As a result, operating income improved 15.6% to $806 million from $697 million a year ago.

RAYTHEON CO Price, Consensus and EPS Surprise

 

RAYTHEON CO Price, Consensus and EPS Surprise | RAYTHEON CO Quote

Quarterly Segment Performance

Integrated Defense Systems: Segment revenues decreased 6% year over year to $1,334 million, driven by lower net sales on various radar production programs and an international communications program. Segment operating income improved to $209 million from $198 million a year ago.

Intelligence, Information and Services: Segment revenues of $1,541 million were higher than the year-ago level of $1,519 million. Operating income in the reported quarter increased to $122 million from $118 million a year ago.

Missile Systems: Segment revenues grew 9% year over year to $1,800 million buoyed by higher sales on the Paveway and Advanced Medium-Range Air-to-Air Missile (AMRAAM) programs. Operating income jumped 10% to $241 million from $219 million a year ago.

Space and Airborne Systems: Revenues in the quarter grew 10% year over year to $1,590 million due to higher sales on an international classified program. Operating income dropped 1% to $210 million due to a change in the program mix.

Forcepoint: This commercial cybersecurity company generated net sales of $149 million in the third quarter, up 31%. The joint-venture entity registered an operating income of $19 million in the reported quarter.

Financial Update

Raytheon ended the third quarter with cash and cash equivalents of $2,342 million, up from $2,328 million as of Dec 31, 2015. Long-term debt was $5,334 million, up marginally from an outstanding debt of $5,330 million as of Dec 31, 2015.

Operating cash flow from continuing operations of $1,632 million as of Oct 2, 2016, up from $1,500 million a year ago.

In the third quarter, Raytheon repurchased 1.4 million shares of common stock for $198 million.

Guidance

Raytheon raised the upper limit of its 2016 revenue guidance. The company currently expects to revenues in the range of $24.2–$24.5 billion, compared to the earlier range of $24.0–$24.5 billion. Management also upgraded its earnings projection to the range of $7.28–$7.38 per share from $7.13−$7.33 for 2016.

The company continues to expect 2016 operating cash flow from continuing operations in the band of $2.8−$3.1 billion.

Recent Peer Releases

Lockheed Martin Corp. (LMT - Free Report) reported third-quarter 2016 earnings of $3.61 per share, surpassing the Zacks Consensus Estimate of $2.86 by 26.2%. Earnings also increased 49.2% from the year-ago level. It has a Zacks Rank #3 (Hold).

Rockwell Collins Inc. reported results for fourth-quarter fiscal 2016 ended Sep 30. The company’s adjusted earnings per share of $1.58, beating the Zacks Consensus Estimate of $1.57 by 0.6%. Reported earnings improved 14.5% from $1.38 a year ago. The company has a Zacks Rank #4.

Honeywell International Inc. (HON - Free Report) reported third-quarter 2016 adjusted earnings of $1.67 per share, comfortably beating both the Zacks Consensus Estimate and the year-ago equivalent figure of $1.60 by 4.4%. The stock carries a Zacks Rank #4. 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>   


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Lockheed Martin Corporation (LMT) - free report >>

Honeywell International Inc. (HON) - free report >>

Raytheon Company (RTN) - free report >>