When Raytheon (NYSE:RTN) releases its third quarter earnings on Thursday, October 25, 2012, analysts are expecting a 8.6% drop in earnings from a year ago. The consensus estimate is $1.27 per share, down from earnings of $1.39 per share a year ago.

Earnings season is important to investors because it shows how much profit is left in the company's hand after deducting costs from revenue. SEE: 5 Tricks Companies Use During Earnings Season

What to Expect: Three months ago, the consensus estimate was $1.29. For the fiscal year, analysts are projecting earnings of $5.33 per share.

Raytheon is expected to beat last year's reported revenue of $6.13 billion and come in at $6.16 billion for the quarter. Raytheon is expected to report revenue of $24.54 billion for the fiscal year.

Company Performance: Raytheon has experienced four consecutive quarters of revenue decline. It fell 3.7% in the second quarter, 2% in the first quarter, 6.4% in the fourth quarter of the last fiscal year and 2.2% in the third quarter of the last fiscal year.

The P/E ratio for RTN is 9.7, above the industry average of 7.72. Usually, if a stock has a high P/E ratio, it indicates that the market expects the company to grow earnings quickly in the future. A simple P/E ratio can reveal the stock's real market value and show how the valuation compares to its industry group or a benchmark like the S&P 500 Index. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock

The stock price has increased from $55.31 on July 24, 2012 to $55.87 over the past quarter. Raytheon's best recent streak was when its price gained $2.18 per share between October 12, 2012 and October 18, 2012.

The Competition: Raytheon provides electronics, mission systems integration and other capabilities to customers in defense, homeland security and other government markets throughout the world. The company's closest competitor in the aerospace and defense industry, Boeing (BA), will report earnings on October 24, 2012. Analysts are expecting earnings of $1.12 per share for Boeing, down 23.3% from last year's earnings of $1.46 per share. Analysts are more optimistic about Raytheon than about Boeing. Only 19 out of 22 analysts rate the latter a buy compared to six of 18 for the former.

Related Articles
  1. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  2. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  3. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  4. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  5. Investing News

    Chipotle Served with Criminal Probe

    Chipotle's beat muted expectations and got a clear bill from the CDC, but it now appears that an investigation into its E.coli breakout has expanded.
  6. Stock Analysis

    Analyzing Sprint Corp's Return on Equity (ROE) (S)

    Learn about Sprint's return on equity. Find out why its ROE is negative and how asset turnover and financial leverage impact ROE relative to Sprint's peers.
  7. Stock Analysis

    Why Alphabet is the Best of the 'FANGs' for 2016

    Alphabet just impressed the street, but is it the best FANG stock?
  8. Investing News

    A 2016 Outlook: What January 2009 Can Teach Us

    January 2009 and January 2016 were similar from an investment standpoint, but from a forward-looking perspective, they were very different.
  9. Mutual Funds & ETFs

    3 Vanguard Equity Fund Underperformers

    Discover three funds from Vanguard Group that consistently underperform their indexes. Learn how consistent most Vanguard low-fee funds are at matching their indexes.
  10. Investing News

    Alphabet Earnings Beat Expectations (GOOGL, AAPL)

    Alphabet's earnings crush analysts' expectations; now bigger than Apple?
RELATED FAQS
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center