Raytheon Company (RTN - Analyst Report) has received a $173 million U.S. Army contract for the production of Excalibur precision-guided projectile rounds. First introduced in 2007, Excalibur is a 155 mm precision-guided artillery round with an extended range that is currently in use by the U.S. Army and Marine Corps.
Using GPS precision guidance technology, Excalibur provides first round fire-for-effect capability with accuracy well within 10 meters (32.8 feet) of its target.
Based in Massachusetts, Raytheon Company is one of the largest aerospace and defense companies in the U.S., with a diversified line of military products, including missiles, radars, sensors, surveillance and reconnaissance equipment, communication and information systems, naval systems, air traffic control systems and technical services.
Raytheon is one of the best-positioned companies among the large-cap defense players because of its non-platform-centric focus. Looking forward, the company enjoys strong order booking and orders backlog, operational improvements and an above industry average ROE.
Raytheon’s strong balance sheet provides financial flexibility in matters of incremental dividend, ongoing share repurchases and earnings accretive acquisitions.
Raytheon in March 2011 raised its quarterly dividend by 15%, bringing its annualized dividend rate to $1.72 per share from the previous payout rate of $1.50 per share.
As a result the company will now pay a quarterly dividend of $0.43 per share to its shareholders, compared with $0.375 earlier. The increased quarterly dividend will be paid on April 28, 2011 to shareholders of record as on April 6, 2011.
Raytheon’s new annualized dividend rate reflects a current yield of 3.53%. This compares favorably with the current dividend yields of its closest peers -- FLIR Systems Inc. (FLIR - Analyst Report) with a yield of 0.70% and L-3 Communications Holdings Inc. (LLL - Analyst Report) with a yield of 2.32%. The above positives however, are offset by apprehensions over future growth in the U.S. defense budget, the fate of high-cost programs, risks related to key project executions and order cancellations.
Raytheon is slated to release its earnings for the first quarter of fiscal 2011 on April 28, 2011. The Zacks Consensus Estimate for the first quarter is $1.09, down 7.71% year over year. The Zacks Consensus Estimate for fiscal 2011 is $5.00, down 10.44%.
Raytheon had a consistent track record with regard to surpassing earnings estimates in the last four quarters with a trailing four-quarter average of 14.97%. The company presently retains a short-term Zacks #2 Rank (Buy) that corresponds with our long-term Neutral recommendation on the stock.