by winston » Tue Nov 03, 2020 11:53 am
not vested
Raytheon Technologies (RTX)
First up is Raytheon, a major research and manufacturing contractor for the US defense and aerospace industries.
This company produces many of the air-to-surface guided missiles and fighter aircraft radar systems used by the US Air Force.
The military tries to make the contracting process as varied as possible, but there are limited number of companies capable of producing high-end, modern hardware for the Pentagon – and Raytheon benefits from being part of a small club.
A combination of military retrenchment and the ongoing coronavirus crisis pushed Raytheon’s revenues down in Q1, and both revenues and earnings down in Q2.
The third quarter, however, saw a bounce back as EPS jumped 45% to 58 cents. It’s important to note that RTX has beaten the quarterly earnings forecasts consistently, going back two years.
Along with the quarterly earnings, Raytheon announced its dividend payment, at 47.5 cents per common share. This is the third quarter in a row with the dividend at this level; the company reduced the payment earlier this year, to keep it affordable when the share price fell.
RTX’s dividend gives a yield of 3.5%, nearly double the Industrial Goods sector average for peer companies.
Turning to the insiders, we see two big purchases in the last few days. First, President and CEO Gregory Hayes laid down $3.35 million for a bloc of 61,406 shares in his company. The second large buy was from Thomas Kennedy, who’s 19,000 share purchase cost an estimated $999,800. These buys are a show of confidence in the company, coming the day after the Q3 earnings release.
Covering Raytheon for RBC Capital, analyst Michael Eisen noted, “We believe the company is executing well with what is within its control, delivering on cost take out, synergy realization, and FCF generation…”
Looking at the details, and the company strengths, Eisen adds, “…we view the company’s book of business as one of the most attractive under coverage with heavy alignment with the fastest and most supported missile, missile defense, cyber, and space systems.”
In line with his comments, Eisen gives Raytheon an Outperform (i.e. Buy) rating, and his $68 price target suggests a 22% upside for the stock.
Overall, Raytheon’s Strong Buy analyst consensus rating is unanimous, based on 7 recent Buy reviews. The stock is selling for $55.61 and the average price target of $76.71 implies a one-year upside of 38%.
Source: TipRanks
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