We expect Raytheon Company RTN to beat expectations when it reports first-quarter 2015 results before the opening bell on Apr 23.
Last quarter, Raytheon posted a 4.49% positive surprise. Let’s see how things are shaping up for this announcement.
What is Driving the Better-than-Expected Earnings?
Raytheon’s non-platform centric focus and investment in technological progress have ensured steady performances. The company continued to score contracts from the U.S. Department of Defense and international customers on the strength of its diversified portfolio in the first quarter.
Restraining cost and improving affordability have been Raytheon’s focal point throughout – a strategy that’s going to help its margins.
Another deserving mention is the company’s growing presence in cyber security. Raytheon’s acquisition of Blackbird Technologies in Nov 2014 having enhanced its unique cyber and other capabilities is expected to boost its Intelligence, Information and Services (IIS) segment revenues.
Why a Likely Positive Surprise?
Our proven model shows that Raytheon is likely to beat earnings because it has the right combination of two key ingredients.
Positive Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at +12.50%. This is because the Most Accurate estimate of $1.62 per share is higher than the Zacks Consensus Estimate of $1.44. This is a meaningful and leading indicator of a likely positive earnings surprise for the shares.
Zacks Rank: Raytheon Company is currently carrying a Zacks Rank #3 (Hold). Note that stocks with Zacks Ranks #1 (Strong Buy), 2 (Buy) and 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of Raytheon’s Zacks Rank #3 and +12.50% ESP makes us confident of an earnings beat this season.
Other Stocks to Consider
Raytheon is not the only stock looking up this earnings season. We also see likely earnings beats coming from these three industry peers.
Huntington Ingalls Industries, Inc. HII has an earnings ESP of +2.91% and a Zacks Rank #2.
KLX Inc. KLXI has an earnings ESP of +7.90% and a Zacks Rank #3.
Northrop Grumman Corporation NOC has an earnings ESP of +1.33% and a Zacks Rank #3.
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