Raytheon Company (RTN) has been selected by the U.S. Army for the $ 68.6 million order to deliver thermal weapon sights for enhanced night vision capabilities to acquire and accurately prosecute targets.
Raytheon is one of the best-positioned companies among the large-cap defense players because of its non-platform-centric focus. The company’s strong balance sheet provides financial flexibility in matters of incremental dividend, ongoing share repurchases and earnings accretive acquisitions.
Raytheon is slated to release its earnings for the first quarter of fiscal 2011 on April 28, 2011. The Zacks Consensus Estimate for the first quarter is $ 1.09, representing a year-over-year decrease of 7.76%. The Zacks Consensus Estimate for fiscal 2011 is $ 5.00, down 10.44%. Raytheon had a consistent track record with regard to surpassing earnings estimates in the last four quarters with a trailing four-quarter average of 14.97%.
Raytheon enjoys strong order bookings and order backlog, an improving balance sheet, growing cash flow, and operational improvements. Future growth will be driven by its focus on Intelligence, Surveillance and Reconnaissance unmanned systems, training, cyber security, Standard Missile-6, Patriot, Zumwalt and THAAD programs.
This is, 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 any positive triggers, we advise a long-term neutral rating. The company presently retains a short-term Zacks #2 Rank (Buy).
Based in Waltham, Massachusetts, 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 command, control, communications and intelligence systems, as well as a broad range of mission support services. Some of its main competitors are The Boeing Company (BA) and Northrop Grumman Corporation (NOC).
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