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Raytheon (RTN) Misses Earnings in Q4; Issues 2017 View

Raytheon Company RTN reported fourth-quarter 2016 adjusted earnings from continuing operations of $1.84 per share, lagging the Zacks Consensus Estimate of $1.86 by 1.1%. Also, earnings deteriorated from the year-ago figure of $1.85.

In 2016, earnings from continuing operations came in at $7.45, up 10.2% from $6.76 in the year-ago period.

Operational Performance

The company's fourth-quarter revenues of $6,238 million saw a 1.4% year-over-year fall. The reported number also missed the Zacks Consensus Estimate of $6,515 million by 4.2%.

Revenues for full-year 2016 stood at $24 billion, up from $23.2 billion in 2015.

The company's bookings in the fourth quarter were $7,577 million compared with $7,861 million in the year-ago quarter, reflecting a decrease of 3.6%. Total backlog at the end of the quarter was $36.9 billion, up from $34.7 billion at 2015-end. Funded backlog was $25.6 billion, up from $25.1 billion at 2015-end.

Total operating expenses contracted 2.2% to $5,376 million. Operating income of $862 million rose 4.1% from $828 million a year ago.

Segmental Performance

Integrated Defense Systems: Segment revenues fell 9.7% year over year to $1,406 million due to lower sales on the Air Warfare Destroyer (AWD) program and an international communications program. Operating income declined 22% to $219 million, thanks to decreased volume.

Intelligence, Information and Services: Segment revenues of $1,518 million were lower than the year-ago level of $1,537 million. Operating income in the reported quarter rose 9% to $121 million from $111 million a year ago, primarily driven by higher net program efficiencies.

Missile Systems: Segment revenues grew to $1,895 million from $1,879 million a year ago, buoyed by higher sales of Paveway. Operating income increased to $260 million from $258 million a year ago.

Space and Airborne Systems: Revenues in the quarter inched up 2.2% year over year to $1,612 million. Operating income decreased 3.3% to $231 million due to a change in program mix.

Forcepoint: The commercial cybersecurity company generated net sales of $143 million in the fourth quarter, up from $133 million a year ago. The joint-venture entity registered operating income of $11 million in the reported quarter, at par with the year-ago figure.

Raytheon Company Price, Consensus and EPS Surprise

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

Financial Update

Raytheon ended the fourth quarter with cash and cash equivalents of $3,303 million, up from $2,328 million as of Dec 31, 2015. Long-term debt was $5,335 million, up from outstanding debt of $5,330 million as of Dec 31, 2015.

Operating cash flow from continuing operations of $1,141 million in the quarter increased 40.3% year over year.

In the fourth quarter, Raytheon repurchased 0.7 million shares of common stock for $100 million.

Guidance

Raytheon expects 2017 revenues in the range of $24.8 billion to $25.3 billion. It expects earnings from continuing operations at around $7.20−$7.35 per share.

The company projects 2017 operating cash flow from continuing operations at approximately $2.8−$3.1 billion.

Peer Releases

Lockheed Martin Corp. LMT reported fourth-quarter 2016 earnings from continuing operations of $3.25 per share, surpassing the Zacks Consensus Estimate of $3.04 by 6.9%.

The Boeing Co. BA reported adjusted earnings of $2.47 per share for fourth-quarter 2016, beating the Zacks Consensus Estimate of $2.34 by 5.6%.

Textron Inc. TXT reported fourth-quarter 2016 adjusted earnings from continuing operations of 80 cents per share, missing the Zacks Consensus Estimate of 87 cents by 8%.

Zacks Rank

Raytheon currently has 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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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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