Raytheon

If you're like me, you believe that the new federal administration will bring in a greater emphasis on national defense and therefore more business for the defense industries. So I'll be looking at the numbers of several defense companies over the next few days and weeks to see if any of these companies fit with my investing strategy. Today I'll be looking at Raytheon Company.
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Raytheon Company develops technologically integrated products, services, and solutions worldwide. It operates in five segments: Integrated Defense Systems (IDS); Intelligence, Information, and Services (IIS); Missile Systems (MS); Space and Airborne Systems (SAS); and Forcepoint. The IDS segment provides integrated air and missile defense; land and sea-based radar solutions; command, control, communications, computers, cyber, and intelligence solutions; and naval combat and ship electronic systems. The IIS segment offers a range of technical and professional services, such as intelligence, surveillance and reconnaissance, navigation, DoD space and weather, cybersecurity, analytics, training, logistics, mission support, engineering, and automation and sustainment solutions; and air traffic management systems. The MS segment develops and supports a range of weapon systems, including missiles, smart munitions, close-in weapon systems, projectiles, kinetic kill vehicles, directed energy effectors, and combat sensor solutions. The SAS segment provides electro-optical/infrared sensors, airborne radars for surveillance and fire control applications, lasers, precision guidance systems, signals intelligence systems, processors, electronic warfare systems, communication systems, and space-qualified systems for civil and military applications. The Forcepoint segment provides information technology security products and related services to protect from cyber-threats, advanced malware attacks, information leaks, and legal liability and productivity loss. Raytheon Company serves the U.S. Department of Defense (DoD), the U.S. Intelligence Community, the U.S. Armed Forces, the Federal Aviation Administration, the National Oceanic and Atmospheric Administration, Department of Homeland Security, the National Aeronautics and Space Administration, and other international customers. The company was founded in 1922 and is headquartered in Waltham, Massachusetts.
(Summary) (Company) (Chart)

Raytheon Monthly Chart

Raytheon Dividend History

8 January 2016
Price $148.22
1yr Target $161.59
Analysts 17
Dividend $2.93
Payout Ratio 39.32%

1yr Cap Gain 9.02%
Yield 1.97%
1yr Tot Return 10.99%

P/E 19.90
PEG 2.40
Beta 0.65

EPS (ttm) $7.45
EPS next yr $7.44
Forward P/E 19.93
EPS next 5yr 8.31%
1yr Price Support $61.82

Market Cap $43.95 Bil
Revenues $24.16 Bil
Earnings $2.22 Bil
Profit Margin 9.18%

Quick Ratio 1.60
Current Ratio 1.70
Debt/Equity 0.51

1yr RevGR 1.84%
3yr RevGR -1.61%
5yr RevGR -1.57%

1yr EarnGR -5.30%
3yr EarnGR 6.30%
5yr EarnGR 6.86%

1yr DivGR 10.74%
3yr DivGR 10.13%
5yr DivGR 12.30%

ROA 7.70%
ROE 21.80%

​My Path Forward

While I may be very positive on the defense industry, this will probably not be the best choice for an investment in this area. But I could be wrong. I won't know until I look at some of Raytheon's competitors but an initial look at this company's fundamentals, especially the recent revenue growth rates, tells me to look elsewhere. I like the increasing dividend but obviously that has benefited from a rising payout ratio, and that can never be good. There also doesn't seem to be much of an increase in revenues going forward. 

Finally, looking at a PEG of almost 20 while estimating a foward earnings growth rate of just a little higher than 8% will just put downward pressure on the on the shares of this company. These shares have obviously gotten ahead of earnings.

I;ll keep an eye on this company simply because of the industry it's in, but for now I'll look at a few of their competitors.