Raytheon Hits 52-Week High - Analyst Blog
May 13 2013 - 12:00PM
Zacks
Shares of Raytheon
Company (RTN) reached a 52-week high of $64.27 on May 10.
In fact, the Mass. based aerospace and defense contractor has seen
its stock price climb about 11% since the beginning of the
year.
We remain optimistic on the firm’s near-term prospects, supported
by its newly realigned segments, effective cash deployment strategy
and growing cash flow, and operational improvements. Raytheon
retains a Zacks Rank #3 (Hold), implying that it is expected to
trade in line with the broader U.S. equity market over the next one
to three months.
Why the Bullishness?
Given the declining trend in the U.S. defense spending, Raytheon is
one of the best-positioned companies among the large-cap defense
players due to its non-platform-centric focus. This insulates the
company from program specific risk related to cancellation or
deferral of any specific program.
In fact, on Apr 25, Raytheon successfully beat the first quarter
2013 earnings by almost 22%. The reported number was also 5.4%
higher than the year-ago figure. The upside was driven by strong
program execution.
Recently, Raytheon reorganized its business through segment
realignment. The restructuring is expected to streamline
operations, increase productivity and achieve stronger alignment
with customer preferences.
The company expects the new structure to drive productivity,
agility and affordability in a challenging defense and aerospace
market environment. It expects consolidation to bring in savings of
$85 million on an annual basis. The company raised its adjusted
earnings per share guidance to a range of $5.75 to $5.90 from $5.65
to $5.80 earlier for the current year.
Moreover, during the first quarter of 2013, the company repurchased
4.2 million shares for $225 million as a part of its previously
announced share repurchase program. Also, Raytheon increased its
quarterly dividend by 10%, bringing the quarterly dividend to 55
cents (annualized $2.20 per share) from the previous payout of 50
cents (annualized $2.00 per share).
Raytheon generated operating cash flow from continuing operations
of $422 million billion in the first quarter, significantly up from
$111 million in the year-ago quarter. The increase reflects working
capital improvements and the timing of tax payments.
Overall, opportunities for Raytheon are expected to improve, as it
captures a diversified and disparate revenue base that greatly
insulates its performance from cancellation, curtailment or
deferment of a single program.
Other Stocks to Consider
There are certain other companies in the sector like B/E
Aerospace Inc. (BEAV), Wesco Aircraft Holdings,
Inc. (WAIR) and Crane Co. (CR) that offer
great value and are worth buying now. All these firms sport a Zacks
Rank #2 (Buy).
B/E AEROSPACE (BEAV): Free Stock Analysis Report
CRANE CO (CR): Free Stock Analysis Report
RAYTHEON CO (RTN): Free Stock Analysis Report
WESCO AIRCRAFT (WAIR): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Wesco Aircraft (NYSE:WAIR)
Historical Stock Chart
From Jul 2024 to Jul 2024
Wesco Aircraft (NYSE:WAIR)
Historical Stock Chart
From Jul 2023 to Jul 2024