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Raytheon Company (RTN) Falls Further As It's Water-Logged And Getting Wetter

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Raytheon Company ( RTN) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Raytheon Company as such a stock due to the following factors:

  • RTN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $134.2 million.
  • RTN has traded 1.6 million shares today.
  • RTN traded in a range 238.7% of the normal price range with a price range of $2.78.
  • RTN traded below its daily resistance level (quality: 13 days, meaning that the stock is crossing a resistance level set by the last 13 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on RTN:

Raytheon Company designs, develops, manufactures, integrates, and supports technological products, services, and solutions for governmental and commercial customers in the United States and internationally. The stock currently has a dividend yield of 2.5%. RTN has a PE ratio of 14.8. Currently there are 2 analysts that rate Raytheon Company a buy, no analysts rate it a sell, and 12 rate it a hold.

The average volume for Raytheon Company has been 1.6 million shares per day over the past 30 days. Raytheon has a market cap of $28.0 billion and is part of the industrial goods sector and aerospace/defense industry. The stock has a beta of 0.73 and a short float of 2.1% with 4.32 days to cover. Shares are up 52.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Raytheon Company as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • Compared to its closing price of one year ago, RTN's share price has jumped by 58.88%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, RTN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The current debt-to-equity ratio, 0.54, is low and is below the industry average, implying that there has been successful management of debt levels.
  • RAYTHEON CO reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, RAYTHEON CO increased its bottom line by earning $5.66 versus $5.24 in the prior year. This year, the market expects an improvement in earnings ($5.83 versus $5.66).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Aerospace & Defense industry and the overall market on the basis of return on equity, RAYTHEON CO has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

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