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Raytheon (RTN) Gains But Lags Market: What You Should Know

Zacks Equity Research

Raytheon (RTN) closed at $173.45 in the latest trading session, marking a +0.38% move from the prior day. The stock lagged the S&P 500's daily gain of 0.77%. At the same time, the Dow added 0.67%, and the tech-heavy Nasdaq gained 0.75%.

Heading into today, shares of the defense contractor had lost 3.5% over the past month, lagging the Aerospace sector's gain of 5.72% and the S&P 500's gain of 8.19% in that time.

RTN will be looking to display strength as it nears its next earnings release, which is expected to be July 25, 2019. The company is expected to report EPS of $2.61, up 6.53% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $7.01 billion, up 5.74% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $11.62 per share and revenue of $28.79 billion, which would represent changes of +9.52% and +6.41%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for RTN. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.03% higher within the past month. RTN is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, RTN currently has a Forward P/E ratio of 14.87. Its industry sports an average Forward P/E of 21.75, so we one might conclude that RTN is trading at a discount comparatively.

Meanwhile, RTN's PEG ratio is currently 1.32. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. RTN's industry had an average PEG ratio of 2.43 as of yesterday's close.

The Aerospace - Defense Equipment industry is part of the Aerospace sector. This industry currently has a Zacks Industry Rank of 71, which puts it in the top 28% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow RTN in the coming trading sessions, be sure to utilize Zacks.com.


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