Raytheon Company (RTN) has received a $32.2 million contract from the U.S. Navy for Global Positioning, Navigation and Timing Service (‘’GPNTS’’) program. The program is designed to replace the current Navigation Sensor System Interface and support mission-critical real-time positioning, navigation, and timing data services.
To carry out the contract, Raytheon has partnered with Argon ST that provides systems and sensors for the command, control, communications, computers, combat systems, intelligence, surveillance and reconnaissance markets. Argon ST was acquired by The Boeing Company (BA) in 2010 and is now its wholly owned subsidiary.
Beside Argon ST, the company will also leverage the capabilities and expertise of small business partners. Under the contract, Raytheon’s Integrated Defense Systems will be responsible for the design, development, testing and delivery of GPNTS.
Raytheon will provide an open architecture solution that will allow hosting of data in a common computing environment and true "system of systems" architecture that enhances the ship's operability with onboard systems. The company’s experience in leading large, complex ship integration programs, like LPD 17, DDG 1000 and the open architecture Ship Self-Defense System, makes it uniquely qualified to deliver this critical capability to the fleet.
Raytheon is one of the best-positioned companies among the large-cap defense players because of its non-platform-centric focus. Looking forward, the company enjoys strong order bookings and order backlog, an improving balance sheet, growing cash flow, operational improvements.
Recently, Raytheon reported second-quarter 2011 operating earnings of $1.39 per share, beating the Zacks Consensus Estimate of $1.16. Results also were higher than the year-ago quarterly earnings of $1.34 per share. Revenue reported by Raytheon in the quarter under review was $6.22 billion, up 4% from $5.97 billion in the year-ago period.
Results were marginally higher than the Zacks Consensus Estimate of $6.21 billion. The Zacks Consensus Estimates for third quarter 2011 and fiscal year 2011 are currently at $1.33 per share and $4.99 per share, respectively.
These positives are, however, offset by apprehensions over future growth of the U.S. defense budget, the fate of high-cost programs, risks related to key project executions and order cancellations. Thus in the absence of immediate positive triggers, the company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock. The company mainly competes with Northrop Grumman Corporation (NOC) and Lockheed Martin Corporation (LMT).
Based in Waltham, Mass., Raytheon Company is a technology and innovation leader specializing in defense, homeland security and other government markets throughout the world. The company provides state-of-the-art electronics, mission systems integration and other capabilities in the areas of sensing, effects and command, control, communications and intelligence systems, as well as a broad range of mission support services.
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