It has been more than a month since the last earnings report for Raytheon Company . Shares have added about 3.7% 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 on Q3 Earnings, Raises '17 Outlook
Raytheon reported third-quarter 2017 earnings from continuing operations of $1.97 per share, beating the Zacks Consensus Estimate of $1.90 by 3.7%. The figure also improved 7.1% from $1.84 recorded in the year-ago quarter.
Operational Performance
The company’s third-quarter revenues of $6,284 million saw 4.5% year-over-year growth. The reported number however missed the Zacks Consensus Estimate of $6,332 million by 0.8%.
Raytheon’s bookings in the third quarter were $6,957 million compared with $6,923 million in the year-ago quarter, reflecting a rise of 0.5%. Total backlog at the end of the quarter was $36.7 billion, in line with that at 2016-end.
Total operating expenses increased 4.7% to $5,426 million. Operating income of $858 million increased 3.4% from $830 million a year ago.
Segmental Performance
Integrated Defense Systems: The segment’s revenues grew 4% year over year to $1,391 million due to higher sales on an international early-warning radar program awarded in the first quarter. Operating income increased to $231 million from $211 million.
Intelligence, Information and Services: The segment’s revenues of $1,543 million were higher than the year-ago level of $1,534 million by 1%. Operating income in the reported quarter dropped to $112 million from $123 million a year ago.
Missile Systems: Segment revenues grew 10% to $1,945 million from $1,770 million a year ago, driven by higher net sales on the Paveway and Excalibur programs. Operating income improved to $280 million from $235 million a year ago.
Space and Airborne Systems: Revenues in the quarter remained almost flat at $1,597 million. Operating income dropped 1% to $212 million.
Forcepoint: This commercial cyber-security segment generated net sales of $170 million in the third quarter, up from $167 million a year ago. The joint-venture entity registered operating income of $23 million in the reported quarter, down from the year-ago figure of $41 million.
Financial Update
Raytheon ended the third quarter with cash and cash equivalents of $2,311 million, down from $3,303 million as of Dec 31, 2016. Long-term debt was $4,749 million, down from an outstanding debt of $5,335 million as of Dec 31, 2016.
Operating cash flow from continuing operations was $1,123 million in the quarter compared with $1,711 million in the year-ago quarter.
In the reported quarter, Raytheon repurchased 1.1 million shares of common stock for $200 million.
Guidance
Raytheon has raised its top and bottom-line full-year guidance. The company currently expects 2017 revenues in the range of $25.3-$25.6 billion, up from the prior guidance range of $25.1-$25.6 billion. It now expects earnings from continuing operations at around $7.45-$7.55 per share, up from $7.35-$7.50.
Raytheon, however, continues to expect 2017 operating cash flow from continuing operations to be approximately $2.8-$3.1 billion.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend for fresh estimates. There have been two revisions lower for the current quarter.
VGM Scores
At this time, Raytheon's stock has a poor Growth Score of F, however its Momentum is doing a bit better with a C. The stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stocks has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for momentum based on our styles scores.
Outlook
While estimates have been broadly trending downward for the stock, the magnitude of these revisions has been net zero. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is Raytheon (RTN) Up 3.7% Since the Last Earnings Report?
It has been more than a month since the last earnings report for Raytheon Company . Shares have added about 3.7% 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 on Q3 Earnings, Raises '17 Outlook
Raytheon reported third-quarter 2017 earnings from continuing operations of $1.97 per share, beating the Zacks Consensus Estimate of $1.90 by 3.7%. The figure also improved 7.1% from $1.84 recorded in the year-ago quarter.
Operational Performance
The company’s third-quarter revenues of $6,284 million saw 4.5% year-over-year growth. The reported number however missed the Zacks Consensus Estimate of $6,332 million by 0.8%.
Raytheon’s bookings in the third quarter were $6,957 million compared with $6,923 million in the year-ago quarter, reflecting a rise of 0.5%. Total backlog at the end of the quarter was $36.7 billion, in line with that at 2016-end.
Total operating expenses increased 4.7% to $5,426 million. Operating income of $858 million increased 3.4% from $830 million a year ago.
Segmental Performance
Integrated Defense Systems: The segment’s revenues grew 4% year over year to $1,391 million due to higher sales on an international early-warning radar program awarded in the first quarter. Operating income increased to $231 million from $211 million.
Intelligence, Information and Services: The segment’s revenues of $1,543 million were higher than the year-ago level of $1,534 million by 1%. Operating income in the reported quarter dropped to $112 million from $123 million a year ago.
Missile Systems: Segment revenues grew 10% to $1,945 million from $1,770 million a year ago, driven by higher net sales on the Paveway and Excalibur programs. Operating income improved to $280 million from $235 million a year ago.
Space and Airborne Systems: Revenues in the quarter remained almost flat at $1,597 million. Operating income dropped 1% to $212 million.
Forcepoint: This commercial cyber-security segment generated net sales of $170 million in the third quarter, up from $167 million a year ago. The joint-venture entity registered operating income of $23 million in the reported quarter, down from the year-ago figure of $41 million.
Financial Update
Raytheon ended the third quarter with cash and cash equivalents of $2,311 million, down from $3,303 million as of Dec 31, 2016. Long-term debt was $4,749 million, down from an outstanding debt of $5,335 million as of Dec 31, 2016.
Operating cash flow from continuing operations was $1,123 million in the quarter compared with $1,711 million in the year-ago quarter.
In the reported quarter, Raytheon repurchased 1.1 million shares of common stock for $200 million.
Guidance
Raytheon has raised its top and bottom-line full-year guidance. The company currently expects 2017 revenues in the range of $25.3-$25.6 billion, up from the prior guidance range of $25.1-$25.6 billion. It now expects earnings from continuing operations at around $7.45-$7.55 per share, up from $7.35-$7.50.
Raytheon, however, continues to expect 2017 operating cash flow from continuing operations to be approximately $2.8-$3.1 billion.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend for fresh estimates. There have been two revisions lower for the current quarter.
Raytheon Company Price and Consensus
Raytheon Company Price and Consensus | Raytheon Company Quote
VGM Scores
At this time, Raytheon's stock has a poor Growth Score of F, however its Momentum is doing a bit better with a C. The stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stocks has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for momentum based on our styles scores.
Outlook
While estimates have been broadly trending downward for the stock, the magnitude of these revisions has been net zero. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.