RTN - Embedded Expectations Analysis - 2018 12 20
Raytheon Company (RTN:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 14.4x Uniform P/E, suggesting bearish expectations for the firm, and management has concerns about securing new federal contracts, performance of their IIS business, and their marginsSpecifically, management may have concerns about their strategy to continuously innovate, and may be exaggerating the positive customer feedback they have received on their Lynx infantry fighting vehicle. Moreover, they may lack confidence in their ability to secure additional multi-year federal contracts, particularly the contract to provide the mission payload for the Overhead Persistent Infrared program for the U.S. Air Force, and may lack confidence in their expectation for space to develop into an important market in the next several years. Additionally, they may have concerns about their operations in counter-hypersonics, and about their ability to reduce costs. They may also lack confidence in their ability to sustain outperformance in their IIS business, particularly their net program improvements, and to meet the high-end of their revised sales and EPS guidance. Lastly, they may be concerned about their ability to deliver strong margins in FY 2019
Raytheon, together with its subsidiaries, is a technology company, focused on defense and other government markets. The company has five segments: Integrated Defense Systems, which is engaged in integrated air and missile defense; large land- and sea-based radar solutions; command, control, communications, computers, cyber and intelligence solutions; Intelligence, Information and Services, which provides technical services to intelligence, defense, federal and commercial customers; Missile Systems, which produces missile and combat systems; Space and Airborne Systems, which develops integrated sensor and communication systems for missions; and Forcepoint, which develops cybersecurity products.
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