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6 Defense Stocks Rising Above the Sequester

Strong earnings from sector show cost-cutting has been working

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Raytheon (NYSE:RTN)Last but not least, Raytheon also beat Wall Street expectations yesterday. The company’s adjusted EPS rose from $1.57 in the second quarter last year to $1.64. The company, which derives most of its revenue from military products like the Tomahawk Land Attack Missile and the Patriot Surface-to-Air Missile, also raised its full-year forecast.

Much of RTN’s strong earnings performance can be attributed to cost-cutting measures. The company also has done a good job of taking care of its investors by repurchasing more than 7.5 million shares of its stock so far in 2013.

But Raytheon has managed to grow its integrated defense and missile systems business by looking outside the U.S. for opportunities. Notably, international sales grew by 10% in the quarter and the company sees overseas sales — particularly of its advanced air and missile defense systems — accounting for a growing share of its business.

Headwinds remain, however, as RTN continued to be challenged in its Network Centric Operations and Space & Airborne Systems units because most major U.S. programs are winding down.

As of this writing, Susan J. Aluise did not hold a position in any of the aforementioned securities.

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