GovCon Index– and S&P 500-listed defense contractors Raytheon (NYSE: RTN) and L-3 Communications (NYSE: LLL) lifted full-year earnings per share and revenue guidance before markets opened Thursday with third quarter EPS above Wall Street’s expectations for both companies.
Raytheon showed a year-over-year revenue increase for the third quarter on growth in Paveway guided bomb and air-to-air missile sales, as well as contributions from an international classified program in the company’s space and airborne systems segment.
Raytheon’s increase to full-year earnings guidance fell below the consensus analyst expectations with its midpoint revenue forecast above Wall Street’s estimates.
L-3 issued initial guidance for 2017 below analysts’ earnings and revenue forecasts, while the company expects 1-2 percent sales growth next year on higher activity in its electronic systems and communication systems segments.
L-3’s third quarter revenue declined from the prior year period on lower volume in its aerospace systems segment due to contract completions and demand reduction resulting from the U.S. military drawdown in Afghanistan.
The midpoints of L-3’s updated guidance for this year exceeded analyst forecasts for earnings and revenue.
As of Wednesday’s close, the GovCon Index has risen 7.36 percent since the start of the year and is up 5.05 percent over 12 months.
By comparison, the U.S. stock bellwether S&P 500 composite index has added 4.67 percent on a year-to-date basis and 3.3 percent for 52 weeks.
Raytheon:
- Earnings: $1.79 per share beats Wall Street estimate of $1.66
- Net income: $529 million, up 18.34 percent from prior year period
- Revenue: $6.03 billion, up 4.32 percent, misses Wall Street estimate of $6.07 billion
- 2016 Guidance:
- Earnings raised to $7.28-$7.38 per share from prior $7.13-$7.33 outlook,
Wall Street estimate at $7.41 - Revenue raised to $24.2 billion-$24.5 billion from prior $24 billion-$24.5 billion outlook,
Wall Street estimate of $24.45 billion
- Earnings raised to $7.28-$7.38 per share from prior $7.13-$7.33 outlook,
- Notes:
- Bookings increase 30.57 percent from prior year period to $6.94 billion
- Total backlog at $35.81 billion as of Oct. 2 with $25.66 billion funded
- Stock is up 9.33 percent from the year’s start and has risen 3.63 percent over 12 months
L-3 Communications:
- Earnings: $1.88 per share beats Wall Street estimate of $1.84
- Net income: $151 million, up from a $296 million loss in prior year period
- Revenue: $2.51 billion, down 2.3 percent, misses Wall Street estimate of $2.55 million
- Initial 2017 Guidance:
- Earnings of $8.25 per share misses Wall Street estimate of $8.55
- Revenue midpoint of $10.46 billion misses Wall Street estimate of $10.47 billion
- 2016 Guidance:
- Earnings raised to $7.85-$7.95 per share from prior $7.65-$7.85 outlook,
Wall Street estimate at $7.88 - Revenue raised to $10.25 billion-$10.35 billion from prior $10.15 billion-$10.25 billion outlook,
Wall Street estimate at $10.26 billion
- Earnings raised to $7.85-$7.95 per share from prior $7.65-$7.85 outlook,
- Third quarter 2016 notes:
- Total organic revenue down 2.5 percent year-over-year excluding divestitures and acquisitions
- Organic sales to the U.S. government up 5 percent,
international and commercial customers down 19 percent - Operating margin down to 8.6 percent versus 9 percent in prior year period
- Stock is up 14.33 percent from the year’s start and 22.30 percent over 12 months
