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Raytheon Beats on Q3 Earnings, Lifts '15 Revenue Guidance

Raytheon CompanyRTN reported third-quarter 2015 earnings from continuing operations of $1.47 per share, beating the Zacks Consensus Estimate of $1.40 by 5%. However, earnings lagged the year-ago figure of $1.65 by 10.9%.

Raytheon Company - Earnings Surprise | FindTheBest

Earnings from continuing operations included a 9 cent unfavorable impact from the Raytheon|Websense (RW) acquisition.

Operational Performance

The company's third-quarter revenues of $5,783 million registered 5.6% growth year over year. However, the reported number missed the Zacks Consensus Estimate of $5,801 million by 0.3%.

The company's bookings in the third quarter were $5,315 million compared with $5,878 million in the year-ago period, reflecting a decline of 9.6%. Total backlog at the end of the quarter stood at $33.5 billion, in line with the 2014-end figure, while funded backlog was $24.36 billion, up from $23.09 billion at 2014 end.

Total operating expenses however climbed 7.9% year over year to $5,086 million. Operating income of $697 million decreased 8.6% year over year from $763 million.

Quarterly Segment Performance

Integrated Defense Systems : Segment revenues increased 7% year over year to $1,533 million due to higher sales from international Patriot programs. Segment operating income declined 8% year over year to $212 million owing to a change in program mix.

Intelligence, Information and Services : Segment revenues of $1,438 million were marginally lower than the year-ago level of $1,450 million. Operating income in the reported quarter dropped 8% to $108 million from $118 million a year ago, primarily due to a change in program mix and acquisition-related costs.

Missile Systems : Segment revenues grew 11% year over year to $1,645 million. Operating income increased 15% to $219 million from $190 million a year ago.

Space and Airborne Systems: Revenues in the quarter declined 4% year over year to $1,446 million. This was due to lower sales volume on international tactical radar systems programs. Operating income declined 14% year over year to $204 million due to higher net program efficiencies in the third quarter 2014.

Raytheon|Websense: The newly formed commercial cybersecurity company generated net sales of $114 million in the third quarter. The joint venture entity registered an operating income of $20 million in the reported quarter compared with $5 million a year ago.

Financial Update

Raytheon ended the third quarter with cash and cash equivalents of $2,453 million, down from $3,222 million as of Dec 31, 2014. Long-term debt was $5,334 million, up marginally from an outstanding debt of $5,330 million as of Dec 31, 2014.

Raytheon's capital expenditure of $96 million in the reported quarter rose from $72 million a year ago. Operating cash flow from continuing operations of $1,102 million in the quarter increased 160.5% year over year.

In the third quarter, Raytheon repurchased 2.4 million shares of common stock for $250 million.

Guidance

Raytheon lifted its revenue expectation for 2015 to the range of $23.0 billion to $23.3 billion from its earlier projection of $22.7 billion to $23.2 billion. It however maintained its earnings guidance from continuing operations of $6.47−$6.62 per share.

The company reiterated its 2015 operating cash flow from continuing operations in the range of $2.5−$2.7 billion.

At the Peers

Pentagon's prime contractor, Lockheed Martin Corp. LMT posted third-quarter 2015 earnings of $2.77 per share, comfortably surpassing the Zacks Consensus Estimate of $2.70 by 2.6%.

The Boeing Company BA delivered third-quarter 2015 adjusted earnings of $2.52 per share, confidently beating the Zacks Consensus Estimate of $2.22 by 13.5%.

Upcoming Peer Release

General Dynamics Corp. GD is slated to report third-quarter 2015 results on Oct 28, 2015, before the opening bell. The Zacks Consensus Estimate is $2.10.

Zacks Rank

Raytheon Company currently has a Zacks Rank #4 (Sell).

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BOEING CO (BA): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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