Raytheon Boosts 2016 Guidance
July 28 2016 - 7:50AM
Dow Jones News
Raytheon Co. on Thursday raised its full-year profit guidance to
complete a clean sweep of improved outlooks among the largest U.S.
military contractors that have driven their share prices to record
highs.
Improving military budgets and cost cuts have marked 2016 as a
turnaround year for the defense sector, with sales starting to
climb after three years of decline and cash funneled back to
investors who viewed it as more resilient than industrial companies
more exposed to the slowdown in emerging markets.
Raytheon, which has the largest exposure to overseas markets
among U.S. military contractors, joined larger peers including
Lockheed Martin Corp. and Boeing Co. in raising its profit
expectations for the year as conflicts in the Middle East boosted
demand for bombs and missiles.
Rising profits have helped defense stocks outperform the broader
market and outweighed emerging concerns over some troublesome
military programs and the prospect of higher pension costs in a
sector that has some of the largest unfunded liabilities among any
U.S. companies.
Raytheon Chief Executive Tom Kennedy said in a statement that
its orders, profits and cash flow were all ahead of internal
expectations in the latest quarter, echoing sentiments expressed by
peers over the past week.
The company reported net profit of $704 million for the second
quarter, compared with $503 million a year earlier, with per-share
earnings rising to $2.38 from $1.65 as sales rose 3% to $6 billion.
All four units at the maker of Patriot missile-defense systems and
Paveway laser-guided bombs reported higher profits, including its
Forcepoint cybersecurity business.
Raytheon retained its forecast for revenue to climb to between
$24 billion and $24.5 billion in 2016—compared with $23.2 billion
last year—but lifted per-share profit guidance to $7.13 to $7.33,
up 20 cents from its prior guidance. It also bumped its cash flow
guidance by $100 million to a range of $2.8 billion to $3.1
billion.
Raytheon shares are up 3% in premarket trading. Its shares are
up 8.7% so far this year, outpacing the 6% rise in the S&P 500,
though lagging a 17% gain by Lockheed Martin and the 15% advance by
Northrop Grumman.
Write to Doug Cameron at doug.cameron@wsj.com
(END) Dow Jones Newswires
July 28, 2016 07:35 ET (11:35 GMT)
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