An analysis of Raytheon

1. Raytheon
25-Oct-2018

2. Company overview
• A major U.S. defense contractor developing technologically advanced and integrated products, services and
solutions, such as Integrated Defense Systems, Space and Airborne Systems, etc.
 Key drivers:
• Increase in U.S. defense budget
• More military sales to foreign countries
• North Korea issue that threatens U.S.
 Source of revenue:
• About 70 % of sales to domestic customers including
DoD, NASSA, FAA, etc.
• Rest of sales to foreign customers spanning
over 80 countries
 Opportunities:
• Diversified customer base
• Increase in U.S defense budget
• Demand for defense systems increases
• U.S plan to create a Space Force
 Threats:
• Uncertainties brought about by Khashoggi
incident and thus relationship with Saudi
Arabia

3. Fundamental analysis

4. Fundamental analysis

5. Fundamental analysis
15.00%
15.50%
16.00%
16.50%
17.00%
17.50%
18.00%
18.50%
19.00%
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18
Net sales/Backlog
Backlog, which is equivalent to remaining performance
obligations, represents the dollar value of firm orders
for which work has not been performed.
Company Market Cap Est PE ratio Est PEG
Price (Oct
24th)
Raytheon 54593.1M 19.22 1.29 $191.38
Lockheed Martin 91514.4M 18.52 0.86 $321.35
Boeing 201106.6M 23.91 1.56 $350.05
General Dynamics 55626.8M 16.89 1.5 $187.75
BAE Systems 17130.6M 12.5 2.32 $536.20
Ratios:

6. Technical analysis

7. Conclusion and view
• Due to systematic risk in the U.S equity market these days, Raytheon
has reached a price level that’s close to that in the beginning of the
year. The stock price is likely to rebound at a price of $182.11, but the
technical side of the stock does not look good.
• Q3 result of Raytheon is to be released at 7 a.m. EDT on Oct 25th,
2018.