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Raytheon (RTN) Q4 Earnings Surpass Estimates, Sales Up Y/Y

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Raytheon Company (RTN - Free Report) reported fourth-quarter 2018 earnings per share (EPS) of $2.93 from continuing operations, outpacing the Zacks Consensus Estimate of $2.89 by 1.4%. The bottom-line figure improved a massive 117% from the year-ago quarter’s figure of $1.35 on account of operational improvements and lower taxes primarily associated with tax reform.

For 2018, Raytheon’s earnings came in at $10.15 per share, which surpassed the Zacks Consensus Estimate of $10.11 by 0.4%. The bottom-line figure also improved 46.3% from the prior-year number.

Operational Performance

Raytheon's fourth-quarter sales of $7,360 million increased 8.5% on a year-over-year basis. The reported number, however, fell short of the Zacks Consensus Estimate of $7,502 million by 1.9%.

For 2018, Raytheon generated sales of $27.06 billion, which marginally missed the Zacks Consensus Estimate of $27.19 billion. Year over year, the full-year sales improved 6.7%.

Raytheon Company Price, Consensus and EPS Surprise

Raytheon Company Price, Consensus and EPS Surprise | Raytheon Company Quote

The company’s bookings totaled $8,447 million compared with $8,541 million in the year-ago quarter, reflecting a drop of 1.1%. Total backlog at the end of 2018 was $42.4 billion, up 11% from the previous year’s figure.

Total operating expenses increased 8.1% to $6,146 million. The company’s operating income of $1,214 million rose 10.4% year over year.

Segmental Performance

Integrated Defense Systems: Sales at this segment grew 8% year over year to $1,684 million driven by higher net sales from two international Patriot programs. Meanwhile, operating income remained flat at $247 million.
Intelligence, Information and Services: Sales at this segment totaled $1,711 million, higher than the year-ago level of $1,572 million by 9%. The top-line improvement can be attributed to higher net sales on classified programs in both cyber and space as well as the Development, Operations and Maintenance (DOMino) cyber program.

Operating income in the reported quarter also improved 23% to $144 million from $117 million a year ago.

Missile Systems: Revenues at this segment grew 6% to $2,317 million from $2,185 million a year ago owing to higher net sales on classified programs. However, operating income dropped to $273 million from $278 million a year ago.

Space and Airborne Systems: At this segment, revenues grossed $1,880 million that witnessed a 13% growth from the year-ago quarter number. This upside was driven by higher net sales on classified programs. Also, operating income rose 8% to $262 million on increased volume.

Forcepoint: This commercial cyber-security segment generated net revenues of $172 million in the fourth quarter, up 10% from $156 million a year ago.

Moreover, the joint-venture entity registered operating income of $2 million against an operating loss of $8 million in the prior-year quarter.

Financial Update

Raytheon ended 2018 with cash and cash equivalents of $3,608 million, up from $3,103 million as of Dec 31, 2017. Long-term debt summed $4,755 million, marginally up from an outstanding debt of $4,750 million as of Dec 31, 2017.

Operating cash flow from operating activities amounted to $3,428 million in 2018 compared with $2,747 million in 2017.
In 2018, Raytheon repurchased 6.7 million shares of common stock for $1,325 million.

2019 Guidance  

Raytheon has issued its financial guidance for 2019. The company currently expects to generate revenues in the range of $28.6-$29.1 billion and earnings from continuing operations of around $11.40-$11.60 per share.
Raytheon forecasts its 2019 operating cash flow from continuing operations in the band of $3.9-$4.1 billion.

Zacks Rank

Raytheon currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Releases

The Boeing Company (BA - Free Report) reported adjusted earnings of $5.48 per share for fourth-quarter 2018, beating the Zacks Consensus Estimate of $4.52 by 21.2%. The bottom line reflected an improvement of 8% from $5.07 in the year-ago quarter.

Teledyne Technologies (TDY - Free Report) reported adjusted fourth-quarter 2018 earnings of $2.33 per share, which surpassed the Zacks Consensus Estimate of $2.19 by 6.4%. The bottom line also improved 27.3% from the year-ago quarter’s figure of $1.83.

Textron (TXT - Free Report) reported fourth-quarter 2018 adjusted earnings from continuing operations of $1.15 per share, which surpassed the Zacks Consensus Estimate of 98 cents by 17.3%. The bottom line also surged 55.4% from 74 cents registered in the year-ago quarter.

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