Raytheon Profit Tops View, Lifts Revenue Outlook; Shares Up 8%

(RTTNews) - Defense contractor Raytheon Co. (RTN), Thursday reported a drop in profit for the second quarter, hurt largely by some special items. Nevertheless, on an continuing operations basis, earnings improved from a year ago, driven by higher-than-expected revenues, as its defense business turns to profitability. Moving ahead, the US defense contractor lifted its revenue outlook for the full year 2015, sending its shares up 8 percent.

Waltham, Massachusetts-based Raytheon's second-quarter net profit dropped to $505 million from $551 million last year.

Earnings from continuing operations improved to $504 million or $1.65 per share from $499 million or $1.59 per share last year. On average, ten analysts polled by Thomson Reuters expected earnings of $1.62 per share for the quarter. Analysts' estimates typically exclude special items.

Second-quarter results include a favorable FAS/CAS adjustment of $0.10 per share compared to $0.18 per share last year. The bottom line also included a $0.29 gain from a tax settlement and a $0.09 unfavorable impact related to Raytheon|Websense acquisition.

Raytheon's sales for the second quarter rose 2.6 percent to $5.85 billion from $5.70 billion last year. Analysts had a consensus revenue estimate of $5.48 billion for the quarter.

Raytheon, like most defenses contractors, had been struggling with defense department budget cuts, but it now seems its defense segment is all set to witness a turn around earlier than expected.

The company has lifted its sales outlook for the full year 2015, indicating an increase from last year. Raytheon has not reported a full year sales growth since 2010.

"Our strategy to position the company for global growth is delivering results, which are reflected in the strong bookings and sales growth in the second quarter, as well as our improved growth outlook for 2015," said CEO Thomas Kennedy.

Looking forward, the company now expects full year sales of of $22.7 billion to $23.2 billion, up from prior outlook of $22.3 billion to $22.8 billion. Analysts currently expect revenues of $22.80 billion for 2015.

Raytheon now expects earnings from continuing operations for the full year in the range of $6.47 to $6.62 per share, down from previous guidance of $6.67 to $6.82 per share. Analysts currently expect earnings of $6.39 per share for 2015.

Earnings outlook was lowered to reflect the impact of the creation of Raytheon|Websense unit.

RTN is currently trading at $104.76, up $7.77 or 8.01%, on the NYSE.