Raytheon Co. (NYSE:RTN) — This major aerospace and defense company is the world’s sixth largest military contractor and is directly impacted by government cutbacks in military and aerospace spending. Earnings are expected to rise slightly from a disappointing $5.02 in 2011 to $5.10 in 2012, but the government’s published plan to accelerate defense spending cuts make that estimate uncertain.
Technically RTN rallied from its August low of just under $39 to $43 before rolling over from its 50-day moving average at $44. On Friday, the stock gapped down to its support at the 20-day moving average and the support line of a bearish flag. A new sell signal from the stochastic tells us that the flag’s support may not hold and that the low at just under $39 is in jeopardy.
Only stockholders who are satisfied with RTN’s dividend of $1.72 (4.2% yield) may wish to hold this stock, but they should understand that if earnings decline, the dividend is subject to being cut.
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