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Raytheon Up as Profit Falls but Aerospace Rebound Is Seen

Raytheon rises as the company reports quarterly earnings dropped but expects a revenue rebound at Collins and Pratt & Whitney.

Raytheon Technologies  (RTX) - Get Raytheon Technologies Corp Report shares rose Tuesday after the aerospace-and-defense giant reported fourth-quarter earnings dropped but sees a revenue rebound at the Collins and Pratt & Whitney aerospace units. 

Net income at the Waltham, Mass., company dropped to $135 million, or 9 cents a share, from $1.14 billion, or $1.32, in the year-earlier quarrter. The latest adjusted earnings per share registered 74 cents, topping the 69-cent consensus estimate of analysts surveyed by FactSet.

Sales soared 40% to $16.42 billion in the quarter, beating the FactSet analyst consensus of $16.24 billion. 

Raytheon predicts adjusted earnings per share of 70 cents to 75 cents for the first quarter, compared with the analyst consensus of 70 cents. It expects sales to total $14.8 billion to $15.4 billion, below analysts’ forecast of $15.73 billion.

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Raytheon’s stock recently traded at $68.52, up 3.4%. It has climbed 10% over the past three months.

On the weaker side of Raytheon results, revenue for the Collins aerospace division fell 32% and sales at its Pratt & Whitney engine unit slid 20%. But the company predicts revenue for both companies will jump by double digits in the second half of the year.

Dow Jones noted that such increases would help companies throughout the aerospace-supply chain, including Honeywell International  (HON) - Get Honeywell International Inc. (HON) Report, General Electric  (GE) - Get General Electric Company (GE) Report, Howmet Aerospace  (HWM)  and Woodward  (WWD) - Get Woodward, Inc. Report.

Morningstar analyst Burkett Huey put fair value for Raytheon at $77 after its previous earnings report in October.

“We are slightly decreasing our fair value estimate to $77 per share, as we slow down the company’s sales and margin recovery in its Pratt & Whitney jet engine segment and Collins Aerospace segment,” he wrote in a commentary at the time.