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Is Raytheon Company (RTN) Set to Beat Again in Q1 Earnings?
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Defense prime Raytheon Company is scheduled to release first-quarter 2017 results on Apr 27, before the opening bell.
In the prior quarter, the company reported a positive earnings surprise of 1.08%. It is worth noting that Raytheon outperformed the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 4.58%.
Let’s see how things are shaping up for the company prior to this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Raytheon is likely to beat earnings because it has the right combination of two key ingredients.
Zacks ESP: Raytheon has an Earnings ESP of +1.24%. This is because the Most Accurate estimate stands at $1.63, higher than the Zacks Consensus Estimate of $1.61. 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 #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates.
Notably, 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.
Meanwhile, Raytheon’s combination of a Zacks Rank #3 and +1.24% ESP makes us reasonably certain of an earnings beat.
What’s Driving the Better-Than-Expected Earnings?
Thanks to its wide range of combat-proven defenseproducts, Raytheon continues to receive scrumptious orders from the Pentagon as well as foreign allies of the nation. Being one of the large-cap defense giants in the U.S., the company is able to invest heavily in its technological upgrades. Along with this, its strong cash balance position hints at an encouraging yet-to-be-reported quarter.
Among the highlights of the first quarter, Raytheon clinched a few significant contracts, including a $163.3 million foreign military sales (FMS) deal from the U.S. Army to provide training services to Qatar. Another deal that the company won is the $202.2 million worth FMS contract from the U.S. Army to provide engineering services for the PATRIOT weapon systems program.
Around the end of the quarter, the company announced an 8.9% annual dividend hike, marking the 13th consecutive annual dividend increase by the company. Raytheon has increased its quarterly dividend to 79.75 cents per share, bringing the annualized payout to $3.19 from $2.93 paid earlier. The annual yield on distribution is 2.1%. The hike demonstrated the robust financial position and balanced capital deployment strategy that Raytheon boasts, which is expected to get reflected in the yet-to-be-reported quarter’s results as well.
With regard to its guidance for the first quarter, the company expects to generate sales in the range of $5.7–$5.9 billion. On the bottom-line front, management projects earnings in the band of $1.51–$1.55 per share.
Moreover, the company has decided not to make any discretionary contribution to its pension plans in 2017. This, in turn, will allow its cash flow from operations to increase, compared to prior expectations. In line with this, we may expect to witness raised cash flow figures in the first quarter as well.
However, although demand from a broad base of domestic and international customers is expected to boost bookings for the company in 2017, stronger figures are expected in the second half compared to the first half.
In addition, management projects higher capital expenditures in 2017, on account of expansion conducted by Raytheon in its Arizona operations by adding new high technology production facilities to meet the growth demands. Such higher capital expenditures can be expected to get reflected in the company’s first quarter results as well.
For the first quarter, the Zacks Consensus Estimate for earnings is pegged at $1.61 a share, reflecting an increase of 12.6% year over year, while the consensus for revenues is $5.84 billion, implying a 1.4% year-over-year rise.
Here are some other defense stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Northrop Grumman Corp. (NOC - Free Report) is expected to report first-quarter 2017 results on Apr 26. The company has an Earnings ESP of +1.03% and a Zacks Rank #2.
The Boeing Company (BA - Free Report) is expected to report first-quarter 2017 results on Apr 26. The company has an Earnings ESP of +0.52% and a Zacks Rank #3.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
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Is Raytheon Company (RTN) Set to Beat Again in Q1 Earnings?
Defense prime Raytheon Company is scheduled to release first-quarter 2017 results on Apr 27, before the opening bell.
In the prior quarter, the company reported a positive earnings surprise of 1.08%. It is worth noting that Raytheon outperformed the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 4.58%.
Let’s see how things are shaping up for the company prior to this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Raytheon is likely to beat earnings because it has the right combination of two key ingredients.
Zacks ESP: Raytheon has an Earnings ESP of +1.24%. This is because the Most Accurate estimate stands at $1.63, higher than the Zacks Consensus Estimate of $1.61. 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 #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates.
Notably, 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.
Meanwhile, Raytheon’s combination of a Zacks Rank #3 and +1.24% ESP makes us reasonably certain of an earnings beat.
What’s Driving the Better-Than-Expected Earnings?
Thanks to its wide range of combat-proven defenseproducts, Raytheon continues to receive scrumptious orders from the Pentagon as well as foreign allies of the nation. Being one of the large-cap defense giants in the U.S., the company is able to invest heavily in its technological upgrades. Along with this, its strong cash balance position hints at an encouraging yet-to-be-reported quarter.
Among the highlights of the first quarter, Raytheon clinched a few significant contracts, including a $163.3 million foreign military sales (FMS) deal from the U.S. Army to provide training services to Qatar. Another deal that the company won is the $202.2 million worth FMS contract from the U.S. Army to provide engineering services for the PATRIOT weapon systems program.
Around the end of the quarter, the company announced an 8.9% annual dividend hike, marking the 13th consecutive annual dividend increase by the company. Raytheon has increased its quarterly dividend to 79.75 cents per share, bringing the annualized payout to $3.19 from $2.93 paid earlier. The annual yield on distribution is 2.1%. The hike demonstrated the robust financial position and balanced capital deployment strategy that Raytheon boasts, which is expected to get reflected in the yet-to-be-reported quarter’s results as well.
With regard to its guidance for the first quarter, the company expects to generate sales in the range of $5.7–$5.9 billion. On the bottom-line front, management projects earnings in the band of $1.51–$1.55 per share.
Moreover, the company has decided not to make any discretionary contribution to its pension plans in 2017. This, in turn, will allow its cash flow from operations to increase, compared to prior expectations. In line with this, we may expect to witness raised cash flow figures in the first quarter as well.
However, although demand from a broad base of domestic and international customers is expected to boost bookings for the company in 2017, stronger figures are expected in the second half compared to the first half.
In addition, management projects higher capital expenditures in 2017, on account of expansion conducted by Raytheon in its Arizona operations by adding new high technology production facilities to meet the growth demands. Such higher capital expenditures can be expected to get reflected in the company’s first quarter results as well.
For the first quarter, the Zacks Consensus Estimate for earnings is pegged at $1.61 a share, reflecting an increase of 12.6% year over year, while the consensus for revenues is $5.84 billion, implying a 1.4% year-over-year rise.
Raytheon Company Price and EPS Surprise
Raytheon Company Price and EPS Surprise | Raytheon Company Quote
Other Stocks that Warrant a Look
Here are some other defense stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Northrop Grumman Corp. (NOC - Free Report) is expected to report first-quarter 2017 results on Apr 26. The company has an Earnings ESP of +1.03% and a Zacks Rank #2.
Leidos Holdings, Inc. (LDOS - Free Report) is expected to report first-quarter 2017 results on May 4. The company has an Earnings ESP of +1.28% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Boeing Company (BA - Free Report) is expected to report first-quarter 2017 results on Apr 26. The company has an Earnings ESP of +0.52% and a Zacks Rank #3.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>