It has been about a month since the last earnings report for Raytheon Company . Shares have added about 7.4% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Raytheon Beats Q4 Earnings Estimates, Gives '17 View
Raytheon reported fourth-quarter 2016 adjusted earnings from continuing operations of $1.88 per share, beating the Zacks Consensus Estimate of $1.86 by 1.1%.
In 2016, earnings from continuing operations came in at $7.55, up 11.7% from $6.76 in the year-ago period.
Operational Performance
The company’s fourth-quarter revenues of $6,238 million saw a 1.4% year-over-year fall. The reported number also missed the Zacks Consensus Estimate of $6,515 million by 4.2%.
Revenues for full-year 2016 stood at $24 billion, up from $23.2 billion in 2015.
The company’s bookings in the fourth quarter were $7,577 million compared with $7,861 million in the year-ago quarter, reflecting a decrease of 3.6%. Total backlog at the end of the quarter was $36.9 billion, up from $34.7 billion at 2015-end. Funded backlog was $25.6 billion, up from $25.1 billion at 2015-end.
Total operating expenses contracted 2.2% to $5,376 million. Operating income of $862 million rose 4.1% from $828 million a year ago.
Segmental Performance
Integrated Defense Systems: Segment revenues fell 9.7% year over year to $1,406 million due to lower sales on the Air Warfare Destroyer (AWD) program and an international communications program. Operating income declined 22% to $219 million, thanks to decreased volume.
Intelligence, Information and Services: Segment revenues of $1,518 million were lower than the year-ago level of $1,537 million. Operating income in the reported quarter rose 9% to $121 million from $111 million a year ago, primarily driven by higher net program efficiencies.
Missile Systems: Segment revenues grew to $1,895 million from $1,879 million a year ago, buoyed by higher sales of Paveway. Operating income increased to $260 million from $258 million a year ago.
Space and Airborne Systems: Revenues in the quarter inched up 2.2% year over year to $1,612 million. Operating income decreased 3.3% to $231 million due to a change in program mix.
Forcepoint: The commercial cybersecurity company generated net sales of $143 million in the fourth quarter, up from $133 million a year ago. The joint-venture entity registered operating income of $11 million in the reported quarter, at par with the year-ago figure.
Financial Update
Raytheon ended the fourth quarter with cash and cash equivalents of $3,303 million, up from $2,328 million as of Dec 31, 2015. Long-term debt was $5,335 million, up from outstanding debt of $5,330 million as of Dec 31, 2015.
Operating cash flow from continuing operations of $1,141 million in the quarter increased 40.3% year over year.
In the fourth quarter, Raytheon repurchased 0.7 million shares of common stock for $100 million.
Guidance
Raytheon expects 2017 revenues in the range of $24.8 billion to $25.3 billion. It expects earnings from continuing operations at around $7.20−$7.35 per share.
The company projects 2017 operating cash flow from continuing operations at approximately $2.8−$3.1 billion.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, Raytheon's stock has a nice score of 'B' on growth and momentum front. Charting a somewhat similar path, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for growth and momentum investors while value investors may want to look elsewhere.
Outlook
Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
Image: Bigstock
Raytheon (RTN) Up 7.4% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Raytheon Company . Shares have added about 7.4% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Raytheon Beats Q4 Earnings Estimates, Gives '17 View
Raytheon reported fourth-quarter 2016 adjusted earnings from continuing operations of $1.88 per share, beating the Zacks Consensus Estimate of $1.86 by 1.1%.
In 2016, earnings from continuing operations came in at $7.55, up 11.7% from $6.76 in the year-ago period.
Operational Performance
The company’s fourth-quarter revenues of $6,238 million saw a 1.4% year-over-year fall. The reported number also missed the Zacks Consensus Estimate of $6,515 million by 4.2%.
Revenues for full-year 2016 stood at $24 billion, up from $23.2 billion in 2015.
The company’s bookings in the fourth quarter were $7,577 million compared with $7,861 million in the year-ago quarter, reflecting a decrease of 3.6%. Total backlog at the end of the quarter was $36.9 billion, up from $34.7 billion at 2015-end. Funded backlog was $25.6 billion, up from $25.1 billion at 2015-end.
Total operating expenses contracted 2.2% to $5,376 million. Operating income of $862 million rose 4.1% from $828 million a year ago.
Segmental Performance
Integrated Defense Systems: Segment revenues fell 9.7% year over year to $1,406 million due to lower sales on the Air Warfare Destroyer (AWD) program and an international communications program. Operating income declined 22% to $219 million, thanks to decreased volume.
Intelligence, Information and Services: Segment revenues of $1,518 million were lower than the year-ago level of $1,537 million. Operating income in the reported quarter rose 9% to $121 million from $111 million a year ago, primarily driven by higher net program efficiencies.
Missile Systems: Segment revenues grew to $1,895 million from $1,879 million a year ago, buoyed by higher sales of Paveway. Operating income increased to $260 million from $258 million a year ago.
Space and Airborne Systems: Revenues in the quarter inched up 2.2% year over year to $1,612 million. Operating income decreased 3.3% to $231 million due to a change in program mix.
Forcepoint: The commercial cybersecurity company generated net sales of $143 million in the fourth quarter, up from $133 million a year ago. The joint-venture entity registered operating income of $11 million in the reported quarter, at par with the year-ago figure.
Financial Update
Raytheon ended the fourth quarter with cash and cash equivalents of $3,303 million, up from $2,328 million as of Dec 31, 2015. Long-term debt was $5,335 million, up from outstanding debt of $5,330 million as of Dec 31, 2015.
Operating cash flow from continuing operations of $1,141 million in the quarter increased 40.3% year over year.
In the fourth quarter, Raytheon repurchased 0.7 million shares of common stock for $100 million.
Guidance
Raytheon expects 2017 revenues in the range of $24.8 billion to $25.3 billion. It expects earnings from continuing operations at around $7.20−$7.35 per share.
The company projects 2017 operating cash flow from continuing operations at approximately $2.8−$3.1 billion.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Raytheon Company Price and Consensus
Raytheon Company Price and Consensus | Raytheon Company Quote
VGM Scores
At this time, Raytheon's stock has a nice score of 'B' on growth and momentum front. Charting a somewhat similar path, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for growth and momentum investors while value investors may want to look elsewhere.
Outlook
Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.