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Analysts Expect Raytheon to Beat Its 3Q16 Earnings Guidance

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Nov. 20 2020, Updated 11:41 a.m. ET

Raytheon to declare 3Q16 earnings

Raytheon (RTN), the third-largest defense contractor (XAR) in the US, will release its 3Q16 earnings on October 27. Other defense (PPA) contractors are also scheduled to release their earnings around the same time. Among them, Northrop Grumman (NOC) and General Dynamics (GD) are scheduled to declare their earnings on October 26. Lockheed Martin (LMT) will release its earnings on October 25.

The consensus forecast is for Raytheon to post an adjusted EPS (earnings per share) of $1.66—12.9% growth YoY (year-over-year). It’s higher than the company’s guidance of $1.57–$1.62 for third quarter EPS. Analysts expect sales to rise 4.4% to $6 billion. It’s at the lower end of the company’s guidance of $6 billion–$6.1 billion.

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Raytheon’s 2016 guidance

In its 2Q16 earnings call, Raytheon upgraded its EPS guidance by $0.20 due to its improved operating performance in the first half of the year, expectations of a lower tax rate, and slightly lower interest expenses. The company expects to earn EPS of $7.13–$7.33 on sales of $24 billion–$24.5 billion in fiscal 2016. Raytheon also upgraded its cash flow performance by $100 million. Now, it expects the operating cash flow in the whole year to be $2.8 billion–$3.1 billion. At the business segment level, the company’s better-than-expected operating margins in the IDS (Integrated Defense System) and SAS (Space and Airborne Systems) businesses drove the earnings upgrade. The IDS segment specializes in missile defense, while SAS builds radars and sensors for aircraft and ships.

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