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Raytheon (RTX) Unveils New Share Buyback Program, Stock Up

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  • RTX
  • NOC
  • CW
  • LHX

Shares of Raytheon Technologies Corporation RTX increased 1.5% to $85.01 on Dec 7, following the company’s new $6 billion stock buyback announcement. This new authorization replaces the company’s previous share repurchase authorization of $5 billion.

The new authorization of $6 billion shares is in sync with the company’s commitment to increase its shareholders’ total return. The initiative reflects Raytheon’s ability to generate cash flow for distribution.

Strong Fundamentals Supporting Share Buybacks

Raytheon’s focus on returning cash to shareholders in the form of dividends and share buyback is backed by its financial flexibility. The company witnessed a 34.3% improvement in net cash flow from operating activities in the first nine months of 2021 from the prior-year period. Its adjusted sales improved a solid 16.7% in the same time frame.

The company anticipates generating free cash flow worth approximately $5 billion in 2021, which is higher than the previously guided range of $4.5-$5 billion. This highlights Raytheon’s financial strength in the business to support growth projects, while simultaneously rewarding shareholders with impressive dividends and share buyback.

The company projects adjusted EPS in the range of $4.10 to $4.20 in 2021, which is higher than the earlier guidance of $3.85-$4.00. The raised guidance may have been backed by rebound in the commercial aerospace market. Undoubtedly, such solid fundamentals exhibit Raytheon’s ability to smoothly continue with its commitment of rewarding shareholders with impressive dividends and share buybacks.

Peer Moves

A company’s financial flexibility and disciplined capital allocation strategy aid it in rewarding shareholders with share buybacks. In this context, here are some other companies in the same sector that have exhibited financial strength by indulging in capital deployment through share buybacks and dividends.

In November 2021, Northrop Grumman NOC announced that it has entered into an accelerated share repurchase (“ASR”) agreement with Goldman Sachs & Co. LLC to repurchase $500 million of Northrop’s common stock. The ASR is in addition to previously planned repurchases, including open market share repurchases. With this move, Northrop Grumman is now targeting greater than $3.5 billion of repurchases in 2021.

Interestingly, Northrop Grumman reported third-quarter 2021 earnings of $6.63 per share, which surpassed the Zacks Consensus Estimate by 11.8%. Shares of NOC have returned 17.5% in the past one year.

In November 2021, Curtiss-Wright Corporation CW raised its shares repurchase program by $100 million. With the current authorization, Curtiss-Wright can now make share repurchases worth $350 million in 2021.

Curtiss-Wright reported third-quarter 2021 adjusted earnings of $1.88 per share, which surpassed the Zacks Consensus Estimate of $1.80 by 4.4%. The stock has returned 11.7% in the past one year.

L3Harris TechnologiesLHX generated $1,988 million in adjusted free cash flow during the first nine months of 2021. The company has returned $3,493 million to shareholders through $2,875 million in share repurchases and $618 million in dividends.

L3Harris Technologies’ third-quarter 2021 adjusted earnings was $3.21 per share, which outpaced the Zacks Consensus Estimate by 1.6%. Shares of LHX have gained 13.4% in the past one year.

Price Movement

In the past one year, shares of Raytheon Technologies have gained 14.1% compared with the industry’s growth of 4.8%.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Zacks Rank

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


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