Earnings from Raytheon and Hershey

This is a big day for earnings. We had two Buy List reports this morning, and three more are due later today.

Let’s start with Raytheon (RTN). The defense contractor had a very good second quarter. For Q2, Raytheon earned $2.92 per share. That easily beat Wall Street’s consensus of $2.64 per share.

“The company had very strong second quarter operating results, with our bookings, sales, operating margin, EPS, and cash flow all exceeding our expectations,” said Thomas A. Kennedy, Raytheon Chairman and CEO. “We begin the second half with continued confidence in our growth outlook given our innovative technologies, breadth of franchises, and record backlog.

“Integration planning for the merger with United Technologies is progressing well, with the integration team developing detailed execution plans to capture revenue and cost synergies rapidly and ensure seamless operations post close. We continue to expect the transaction to close in the first half of 2020.”

Raytheon also boosted its full-year guidance. Their sales guidance rises from $28.6 billion – $29.1 billion to $28.8 billion – $29.3 billion. The earnings range increases from $11.40 – $11.60 per share to $11.50 – $11.70 per share.

Raytheon will also be helped by the big defense spending bill recently passed by Congress.

Hershey (HSY) had a very good quarter but guidance wasn’t that great. For Q2, the chocolate company earned $1.31 per share. That beat the Street by 14 cents per share. So with that kind of earnings beat, you’d expect a big increase to guidance. Well, we didn’t get it.

On the plus side, I like that adjusted gross margin was 46.5% in Q2. That’s up from 44.5% in last year’s Q2.

Here are some numbers for Q2:

• Consolidated net sales of $1,767.2 million, an increase of 0.9%.
• Organic constant currency net sales increased 1.8%.
• The net impact of acquisitions and divestitures was a 0.6 point headwind, and foreign currency exchange was a 0.3 point headwind.
• Reported net income of $312.8 million, or $1.48 per share-diluted, an increase of 37%.
• Adjusted earnings per share-diluted of $1.31, an increase of 14.9%.

And here’s a look at what to expect this year:

• Full-year reported net sales are expected to increase around 2%, the mid-point of the previous 1-3% range.

• The net impact of acquisitions and divestitures is estimated to be approximately a 0.5 point benefit.

• The impact of foreign currency exchange is anticipated to be negligible based on current exchange rates.
• Full-year reported earnings per share-diluted are expected to be in the $5.54 to $5.66 range, relatively flat with prior year.
• Full-year adjusted earnings per share-diluted are expected to increase 6% to 7%, the upper half of the previous 5% to 7% range.

For adjusted EPS, the key number, Hershey now expects earnings of $5.68 to $5.74 per share. That’s an increase of five cents to the low. This is after a 14-cent earnings beat.

Posted by on July 25th, 2019 at 10:27 am


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