Raytheon Technologies
A Defense Stock For Traumatic Times!

Members of “Weekly Options USA” Are Using A Weekly Option To Profit!
Join Us and Get the Trade!

Major Catalysts for the Raytheon Weekly Options Trade…..

Exposure .....

Raytheon Technologies, a company that has more exposure to the commercial aerospace industry than many other defense stocks. This quality could be positive or negative depending on how quickly you think commercial air travel will bounce back after the pandemic. With that said, it’s nice to know that Raytheon has a balanced business that includes both commercial aerospace and defense segments, which means it can effectively deal with declines in either component of its business. Given the backdrop of current events, investors should be more interested in Raytheon’s defense business, which includes Raytheon Intelligence & Space and Raytheon Missiles & Defense.

Revenue .....

U.S. Defense spending should help to drive revenue growth for Raytheon in the coming years, particularly thanks to the rising geopolitical tensions and bipartisan support for defense spending.

Sales .....

Raytheon delivered Q4 sales of $17 billion, up 4% year-over-year, and saw its adjusted EPS rise by 46% year-over-year to reach $1.08, which could be a sign of good things to come for the company this year. Finally, with a 1.99% dividend yield, this is a defense stock that investors can confidently hold for the long term.

Russia.....

Russia's invasion and other geopolitical risks raise the possibility of more defense spending by the U.S. and its allies in the years to come as the focus shifts from Afghanistan toward Russia, China and North Korea.

Germany Spending.....

Germany announced it would increase its defense budget to above the 2% of GDP mark that the NATO alliance requires each member to contribute by a 2024 deadline.

"We have to ask ourselves — what capacities does Putin's Russia have and which capacities do we need to counter his threats?" Chancellor Olaf Scholz told parliament Sunday.

The 2% NATO deadline was agreed to in 2014, following Russia's attack on the eastern Ukrainian peninsula of Crimea. President Donald Trump had pressed Germany to boost defense spending ahead of the deadline, threatening to recall U.S. troops from Germany if Berlin didn't increase its defense budget.

Strong Backlogs.....

One of the main reasons that Raytheon is a great company for long-term investment is their business stability. Regardless of economic conditions, the U.S. government spends significant money on defense. Raytheon's defense segment is a beneficiary of this large (and increasing) defense budget. This provides a reliable source of revenue during both a strong and a poor economy.

In 2021, their defense backlog ended at $63 B, and book-to-bill ratio stayed above 1.0. Also, they had several large bookings during 4Q including $1.3 B classified bookings, $670 M of Electro-Optical infrared awards at RIS, and $730 B in Standard Missile-2 productions awards at RMD. Based on these numbers, it's pretty safe to say that Raytheon can cover their operating expenses, buy new machines for expansion, and pay solid dividends to shareholders.

Earnings.....

Raytheon just had an outstanding 4Q 2021 and overall 2021. Both top and bottom lines grew as expected, and they generated free cash flow of $5 B after spending $2.1 B in capital expenditure. Both commercial and defense sides performed strongly, and the result gave plenty of reasons for investors to celebrate.

The most noticeable part was their margin expansion across the board. Mainly fueled by cost synergies from the RTX merger ($760 M), the profit margins (Gross margins, EBIT margins, and EBITDA margins) all increased by 4-5% from pandemic lows. The margins have not quite returned to their pre-pandemic levels, but are certainly headed in the right direction. This gives confidence that the company fundamentals will recover with time.

Analysts Thoughts.....

Morgan Stanley has a price target of $118. Analyst Kristine Liwag believes that the fourth-quarter guidance Raytheon gave is too conservative. The company guided for full-year earnings per share (EPS) of between $4.60 and $4.80 while consensus estimates were at $4.95. In addition, the analyst lauds the company’s strong free cash flow, stable business model and low use of leverage.

Jefferies has a price target of $105. Analyst Sheila Kahyaoglu was impressed with Collins Aerospace’s performance and expects the defense business to grow at a 3% compound annual growth rate (CAGR) until 2023. Additionally, Kahyaoglu sees momentum in profitability and believes that Raytheon should capitalize on international opportunities.

Finally, Argus has a price target of $100. Analyst John Eade believes that technical trends have turned positive, driven by a competent management team and earnings results. Furthermore, the analyst believes that RTX stock is trading “in line with or below” its peer group in terms of price-earnings (P/E) and price-sales (P/S) ratios.

Therefore…..

What Weekly Options Trade Have Members Entered!

Still Time To Take Advantage Of The Profit!

What Other Trades Are We Anticipating?

Do You Wish To Be Part Of This Action?

For answers, join us here at Stock options Made Easy, and get the full details on the next trade.

CLICK HERE to join in future profit.