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

Zacks Equity Research

Raytheon (RTN) closed the most recent trading day at $218.19, moving +0.17% from the previous trading session. This change lagged the S&P 500's 0.86% gain on the day. At the same time, the Dow added 0.79%, and the tech-heavy Nasdaq gained 0.73%.

Prior to today's trading, shares of the defense contractor had gained 1.14% over the past month. This has outpaced the Aerospace sector's loss of 0.8% and lagged the S&P 500's gain of 1.94% in that time.

RTN will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $3.12, up 6.48% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $8.03 billion, up 9.07% from the year-ago period.

RTN's full-year Zacks Consensus Estimates are calling for earnings of $11.88 per share and revenue of $29.29 billion. These results would represent year-over-year changes of +11.97% and +8.25%, respectively.

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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.11% higher. RTN currently has a Zacks Rank of #3 (Hold).

In terms of valuation, RTN is currently trading at a Forward P/E ratio of 18.34. This represents a discount compared to its industry's average Forward P/E of 22.42.

We can also see that RTN currently has a PEG ratio of 1.72. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Aerospace - Defense Equipment industry currently had an average PEG ratio of 2.45 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 150, which puts it in the bottom 42% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

You can find more information on all of these metrics, and much more, on Zacks.com.

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