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Raytheon (RTN) Beats on Q1 Earnings, Hikes '18 EPS View

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Raytheon Company RTN reported first-quarter 2018 earnings from continuing operations of $2.20 per share, beating the Zacks Consensus Estimate of $2.10 by 4.8%. The reported figure also came in higher than the year-ago quarter’s earnings of $1.73 per share by 27.2%.

The year-over-year upside in earnings was driven by operational improvements and lower taxes.

Operational Performance

The company’s first-quarter revenues of $6,267 million witnessed 4.5% year-over-year growth. The reported number also surpassed the Zacks Consensus Estimate of $6,173.2 million by 1.5%.

 

Raytheon Company Price, Consensus and EPS Surprise

 

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

 

Raytheon’s bookings in the first quarter were $6,311 million compared with $5,688 million in the year-ago quarter, reflecting a rise of 11%. Total backlog at the end of first-quarter was $38.1 billion, compared to $38.2 billion at the end of 2017.

Total operating expenses increased 3.4% to $5,226 million in the first quarter. Operating income of $1,041 million improved 9.8% from $1,041 million a year ago.

Segmental Performance

Integrated Defense Systems: The segment’s revenues grew 7% year over year to $1,489 million due to higher sales from an international Patriot program awarded in the first quarter 2018. Operating income increased to $273 million from $212 million.

Intelligence, Information and Services: The segment’s revenues of $1,582 million were higher than the year-ago level of $1,507 million by 5%, on account of higher net sales on classified and training programs. Operating income in the reported quarter increased to $117 million from $111 million a year ago.

Missile Systems: Segment revenues grew 5% to $1,848 million from $1,756 million a year ago, driven by higher net sales on classified programs. Operating income declined to $212 million from $216 million a year ago.

Space and Airborne Systems: Revenues in the quarter inched up 1% to $1,568 million. Operating income rose 2% to $193 million.

Forcepoint: This commercial cyber-security segment generated net sales of $141 million in the first quarter, down from $144 million a year ago. The joint-venture entity incurred operating loss of $7 million in the quarter, as against the year-ago operating income figure of $16 million.

Financial Update

Raytheon ended first-quarter with cash and cash equivalents of $2,748 million, down from $3,103 million as of Dec 31, 2017. Long-term debt was $4,751 million, almost in line with $4,750 million as of Dec 31, 2017.

Operating cash inflow from continuing operations was $283 million at the end of first quarter compared with cash outflow of $41 million in the year-ago quarter.

In the quarter under review, Raytheon repurchased 1.9 million shares of common stock for $400 million. Moreover, the company has hiked the annual dividend rate by 8.8% to $3.47 per share, which marked the 14th consecutive annual dividend increase.

Guidance  
                                                                                                                    
Raytheon raised its guidance for 2018. The company currently expects to generate net sales in the range of $26.5-$27.0 billion, compared to earlier band of $26.4 to $26.9 billion, in 2018.

On the bottom-line front, Raytheon now expects to deliver earnings per share in the range of $9.70-$9.90, up from prior range of $9.55-$9.75. The company however reiterated its cash flow from operating activities guidance in the range of $3.6-$4 billion during 2018.

Zacks Rank

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

Recent Peer Release

Boeing BA reported adjusted earnings of $3.64 per share for first-quarter 2018, beating the Zacks Consensus Estimate of $2.59 by 40.5%. The quarterly bottom line reflected an improvement of 68% from $2.17 in the year-ago quarter.

Lockheed Martin LMT reported first-quarter 2018 earnings from continuing operations of $4.02 per share, which surpassed the Zacks Consensus Estimate of $3.35 by 20%. The earnings figure was higher than the year-ago figure of $2.69 per share, by 49%.

Textron TXT reported first-quarter 2018 earnings from continuing operations of 72 cents per share, which surpassed the Zacks Consensus Estimate of 46 cents by 56.5%. Notably, the bottom line was up 94.6% from 37 cents in the year-ago quarter.

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