Raytheon & L-3 Boost Earnings Guidance on 2Q Beat, Leidos Below Street Outlook

MoneyThree government contractors listed in Executive Mosaic’s GovCon Index reported second quarter financial results before U.S. markets opened Wednesday.

Raytheon (NYSE: RTN) and L-3 Communications (NYSE: LLL) both lifted full-year earnings and revenue guidance Thursday on second quarter results that topped the consensus analyst outlooks for each figure.

Raytheon cited sales of its Paveway bomb and activity in its cybersecurity and special missions program lines, while L-3 attributed higher revenue on business jet deliveries to foreign military sales customers.

Leidos Holdings (NYSE: LDOS) stated earnings per share and revenue below the consensus Wall Street expectation but boosted its full-year EPS guidance with a narrowed outlook for sales.

Leidos’ updated forecast for 2016 does not factor in impacts from the company’s impending merger with Lockheed Martin‘s (NYSE: LMT) information systems and global solutions segment scheduled to close in mid-August.

Reston, Virginia-based Leidos will hold an investor day Monday at the New York Stock Exchange to discuss the deal and offer an updated financial outlook on the future combined company, while its annual shareholder meeting is scheduled for Aug. 8.

As of Wednesday’s close, the GovCon Index has risen 7.86 percent year-to-date and 9.93 percent for 12 months.

By comparison, the S&P 500 composite index that includes 11 GCI companies has climbed 6 percent for 2016 so far and 4.79 percent over 52 weeks.

Raytheon (An S&P 500 stock):

  • Earnings per share: $2.38 beats Wall Street estimate of $1.74
  • Net income: $704 million, up 39.96 percent from prior year period
  • Revenue: $6.03 billion, up 3.07 percent, beats Wall Street estimate of $5.83 billion
  • Guidance:
    • Earnings lifted to $7.13-$7.33 per share from prior $6.93-$7.13 range
    • Revenue unchanged at $24 billion-$24.5 billion
  • Notes:
    • Earnings include tax-free gain of 53 cents, or $158 million,  in June restructure of ThalesRaytheonSystems joint venture
    • Sales increase driven by Paveway bombs, cybersecurity, special mission programs and the Forcepoint joint venture
  • Stock is up 8.86 percent from the year’s start and 30.26 over 12 months

L-3 Communications (An S&P 500 stock):

  • Earnings per share: $1.88 beats Wall Street estimate of $1.69
  • Net income: $147 million, up 26.72 percent from prior year period
  • Revenue: $2.66 billion, up 4.72 percent, beats Wall Street estimate of $2.49 billion
  • Guidance:
    • Earnings lifted to $7.65-$7.85 per share from prior $7.55-$7.75 range
    • Revenue lifted to $10.15 billion-$10.25 billion from prior $9.95 billion-$10.15 billion range
  • Notes:
    • Organic revenue excluding acquisitions and February NSS segment sale up nearly 7 percent on aerospace systems sales
    • Operating margin at 9.3 percent versus 6 percent in same period last year
  • Stock is up 23.38 percent from the year’s start and 22.2 percent over 12 months

Leidos Holdings

  • Earnings: 68 cents misses Wall Street estimate of 73 cents
  • Net income: $41 million, up 10.81 percent from prior year period
  • Revenue: $1.29 billion, up 2.38 percent, misses Wall Street estimate of $1.29 billion
  • Guidance:
    • Earnings lifted to $2.85-$3.05 per share from prior $2.75-$2.95 outlook
    • Revenue narrowed to $5.1 billion-$5.2 billion from prior $5.1 billion-$5.3 billion outlook
  • Notes:
    • Sales increase helped by activity under a logistics contract with the U.K. defense ministry
    • Net income includes $15 million in acquisition and integration costs for Lockheed IS&GS merger
  • Stock is down 9.95 percent from the year’s start and up 35.29 percent over 12 months
  • Stock has fallen 2.48 percent since the merger’s Jan. 26 announcement

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