Raytheon Company (RTN) completed all the testing and system requirements of the Upgraded Early Warning Radar (UEWR) at Thule Air Base, Greenland.
The UEWR is now ready to carry out its missile defense mission, which is a critical component of the Ballistic Missile Defense System.
The UEWR will help the company to develop reliable radar solutions, add missile defense capabilities, and provide early detection and accurate tracking of incoming ballistic missiles. Additionally, the program will support space surveillance missions and also provide quick and accurate determination of threat versus non-threat objects.
Early Warning Radars (EWRs) are phased-array surveillance radars that the U.S. military uses to detect incoming ballistic missiles. The Missile Defense Agency plans to enhance these EWRs to Upgraded Early Warning Radars in order to integrate them with the future U.S. national missile defense system. The UEWR is Ultra High Frequency phased-array radars. The upgraded EWRs undergo various hardware and software enhancements.
Raytheon had received the UEWR Thule contract in April 2006 from the Missile Defense Agency and had completed its construction phase in March 2008.
In January this year, Raytheon reported fourth-quarter 2010 adjusted earnings of $1.57 per share, beating the Zacks Consensus Estimate by 42 cents. For full year 2010, Raytheon reported adjusted earnings of $5.58 per share, surpassing the Zacks Consensus Estimate by a substantial 99 cents. Revenue reported by Raytheon in the quarter was $6.9 billion versus the Zacks Consensus Estimate of $7.1 billion. Full year 2010 revenue of $24.9 billion lagged the Zacks Consensus Estimate of $25.4 billion. Backlog at fiscal 2010 end totaled $34.6 billion out of which $22.6 billion was funded.
Raytheon is one of the best-positioned companies among the large-cap defense players because of its non-platform-centric focus. Looking forward, the company is supported by strong order bookings and order backlog, an improving balance sheet, growing cash flow, operational improvements and an above industry average ROE. This is, however, offset by apprehensions over future growth of the U.S. defense budget, the fate of high-cost programs, risks related to key project executions and order cancellations. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
Based in Massachusetts, Raytheon is one of the largest aerospace and defense companies in the U.S., with a diversified line of military products, including missiles, radars, sensors, surveillance and reconnaissance equipment, communication and information systems, naval systems, air traffic control systems, and technical services. The company mainly competes with Lockheed Martin Corporation (LMT) and Northrop Grumman Corporation (NOC).
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