Raytheon (RTN) is making headlines this week for landing a $149 million contract with Israel’s Rafael Advanced Defense Systems to provide key components for the Iron Dome defense system. Is it prime time to buy this defense stock?
Company Overview
Based in Waltham, Massachusetts, Raytheon is a major American defense contractor who specializes in weapons and military electronics.
Throughout Raytheon’s 90-year history, Raytheon has served a wide base of public and private clients, oftentimes in conjunction with some of its biggest competitors, including Boeing (BA), Lockheed Martin (LMT) and Northrop Grumman (NOC). Raytheon employs approximately 63,000 worldwide and brought in nearly $24 billion in sales last year.
Earnings Outlook
Raytheon recently posted a strong second-quarter report with net sales of $5.7 billion and a reported operating margin of 13.3%.
I expect more of the same for Raytheon’s upcoming Q3 report, which is expected to release around October 23. Earnings are expected to grow an impressive 7.3%, which is above the industry average of 4%. Raytheon sales are expected to dip 4%, but that’s mostly due to U.S. budget cuts.
Yield-seekers may like to know that RTN stock pays a 2.4% dividend and went ex-dividend on September 29. RTN shareholders will be paid $0.605 per share on October 30.
Current Ratings
RTN stock has great buying pressure, earning an impressive “A” for its Quantitative Grade. On the fundamentals front, though, Raytheon still has room for improvement.
Raytheon is struggling in terms of sales growth (F) and its track record of earnings surprises (D). Earnings growth (C) and analyst earnings revisions (C) are also lackluster.
At the same time, Raytheon is doing well in terms of cash flow (B), return on equity (B), earnings momentum (B), and operating margin growth (B). RTN stock’s overall grade is a solid “B.”
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Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
