Raytheon (NYSE: RTN), a defense contractor whose related companies include Northrop Grumman (NYSE: NOC) and Boeing (NYSE: BA), posted second-quarter results earlier in the week. The company seems to be performing pretty well, judging by the growth in the stats.
Net sales increased 4%. Okay, that might not sound so robust, but income from continuing operations rose 25% to $1.24 per share. According to Earnings.com, the market was only looking for $1.13 per share from Raytheon. Operating cash flow also looked good, especially once you take into account a timing element related to cash contributions for pension plans.
Raytheon is definitely a big gun in its industry. The quarter was very solid, and management definitely is looking for the good times to continue. The change in the outlook for fiscal-year earnings should please shareholders. Also, I like that Raytheon has been buying back some stock.
Raytheon shares haven't done much in the last couple months. They closed on Friday at a price of $45.39 per share. Recently, Eric Buscemi highlighted a lot of analyst calls, and Raytheon was on the list. The company had received an upgrade from BofA/Merrill, and a price target of $62 was placed on the stock.
I'm not sure whether Raytheon will get to $62, but my gut does tell me that the stock is heading higher. The company's operations appear to be running smoothly, and the fact that the stock hasn't had a huge run-up in very recent times suggests to me that shares possess upside potential. You have to take a long-term perspective, however. Raytheon isn't necessarily the kind of investment that will give you unusual capital appreciation overnight.
I like the numbers and the story. Next time Raytheon takes a dip, have a look. I'd rather start my buying consideration at a lower price from current levels.
Disclosure: I don't own any company mentioned; positions can change without notice.