Analysis of Investments
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Raytheon Co. pages available for free this week:
- Statement of Comprehensive Income
- Cash Flow Statement
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Selected Financial Data since 2005
- Price to Operating Profit (P/OP) since 2005
- Analysis of Debt
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Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities
Raytheon Co., adjustment to net income attributable to Raytheon Company
US$ in millions
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
The reported net income attributable to Raytheon Company demonstrated an overall upward trend from 2015 to 2019. Starting at 2,074 million US dollars in 2015, it experienced a moderate increase in 2016, reaching 2,211 million US dollars. A slight decline followed in 2017, with net income decreasing to 2,024 million US dollars. However, the company saw a significant recovery in 2018, as reported net income rose sharply to 2,909 million US dollars, continuing to increase in 2019 to 3,343 million US dollars.
The adjusted net income attributable to the company followed a very similar pattern to the reported net income, with values closely aligned throughout the period. Beginning at 2,071 million US dollars in 2015, adjusted net income rose to 2,221 million US dollars in 2016, slightly decreased to 2,023 million US dollars in 2017, then surged to 2,910 million US dollars in 2018 and further to 3,340 million US dollars in 2019.
- Income Trends
- There is a clear overall upward movement in both reported and adjusted net income over the five-year period, indicating growth in profitability. The dip observed in 2017 represents a temporary setback that was rectified in subsequent years.
- Comparison Between Reported and Adjusted Income
- The close alignment of reported and adjusted net income values suggests minimal impact from one-time charges, restructuring costs, or other adjustments within these periods, reflecting consistency in earnings quality.
- Growth Rate
- The period from 2017 to 2019 accounts for the most notable income gains, with an increase of approximately 1,316 million US dollars in reported net income, highlighting strong operational improvements or favorable market conditions impacting earnings.
Adjusted Profitability Ratios: Mark to Market Available-for-sale Securities (Summary)
Raytheon Co., adjusted profitability ratios
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
- Net Profit Margin
- The net profit margin exhibited slight fluctuations over the analyzed period. After increasing from 8.92% in 2015 to 9.19% in 2016, it declined to 7.98% in 2017 before experiencing a notable rise to 10.75% in 2018. This upward momentum continued with a further increase to 11.46% in 2019. The adjusted margins closely mirror the reported figures, indicating consistency in profit margin assessment.
- Return on Equity (ROE)
- ROE demonstrated an overall upward trend from 20.48% in 2015 to 27.35% in 2019. A slight dip occurred in 2017, decreasing to approximately 20.3%, but this was followed by a significant increase to 25.36% in 2018 and a further rise in 2019. The adjusted ROE values corroborate the reported data, suggesting reliability in equity performance measurement over these years.
- Return on Assets (ROA)
- The ROA showed a consistent pattern similar to other profitability metrics. Beginning at 7.08% in 2015, it rose slightly in 2016, then declined in 2017 to around 6.56%. A strong recovery is evident in 2018 with a rise to 9.13%, continuing to increase to 9.67% in 2019. Adjusted ROA figures are nearly identical to the reported ones, reinforcing the stability of asset utilization outcomes.
- Overall Insights
- All the key profitability indicators demonstrate a dip in 2017 followed by substantial improvement in 2018 and 2019. The consistency between reported and adjusted figures across profit margin, ROE, and ROA suggests minimal impact of one-time or extraordinary items on reported profitability measures. The data reflects strengthening financial performance with enhanced efficiency in generating profit from equity and assets during the latter part of the period under review.
Raytheon Co., Profitability Ratios: Reported vs. Adjusted
Adjusted Net Profit Margin
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
2019 Calculations
1 Net profit margin = 100 × Net income attributable to Raytheon Company ÷ Net sales
= 100 × ÷ =
2 Adjusted net profit margin = 100 × Adjusted net income attributable to Raytheon Company ÷ Net sales
= 100 × ÷ =
- Net Income Trends
- The reported net income attributable to Raytheon Company demonstrated an overall upward trajectory during the analyzed period. Beginning at $2,074 million in 2015, it experienced a moderate increase in 2016 to $2,211 million, followed by a slight decline in 2017 to $2,024 million. Subsequently, a significant rise was observed in 2018 and 2019, reaching $2,909 million and $3,343 million respectively. The adjusted net income figures closely mirror this pattern, indicating consistency in the adjustments made to reported net income.
- Net Profit Margin Patterns
- Both reported and adjusted net profit margins show similar trends and values throughout the period. Starting at approximately 8.9% in 2015, the margins improved to around 9.2% in 2016 before declining to 8.0% in 2017. From 2017 onward, there was a strong positive progression, with margins increasing to roughly 10.75% in 2018 and continuing upward to approximately 11.45% in 2019. This indicates improved profitability and possibly enhanced operational efficiency or better cost management during the latter years.
- Comparison Between Reported and Adjusted Metrics
- The reported and adjusted net income and net profit margin figures are closely aligned across all years. Differences between reported and adjusted net income values are minimal, generally in the range of a few million US dollars, and the profit margins exhibit nearly identical percentages. This suggests that the adjustments made are minor and do not significantly affect the overall financial performance portrayal.
Adjusted Return on Equity (ROE)
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
2019 Calculations
1 ROE = 100 × Net income attributable to Raytheon Company ÷ Total Raytheon Company stockholders’ equity
= 100 × ÷ =
2 Adjusted ROE = 100 × Adjusted net income attributable to Raytheon Company ÷ Total Raytheon Company stockholders’ equity
= 100 × ÷ =
- Net Income
- The reported net income attributable to the company displayed a general upward trend from 2015 to 2019. Starting at $2,074 million in 2015, it rose to $3,343 million by 2019. A slight decline was observed in 2017, dropping to $2,024 million from $2,211 million in 2016, before significantly increasing in 2018 and continuing to grow in 2019. The adjusted net income followed a nearly identical pattern, starting at $2,071 million in 2015 and reaching $3,340 million in 2019, which indicates consistency between reported and adjusted figures.
- Return on Equity (ROE)
- Both reported and adjusted ROE percentages demonstrated a positive trend over the five-year period, showing improved profitability relative to shareholder equity. Reported ROE increased from 20.48% in 2015 to 27.35% in 2019, with a minor dip in 2017 to 20.32% from 21.97% in 2016, followed by a strong recovery and growth through 2018 and 2019. Adjusted ROE mirrored this trend closely, starting at 20.45% in 2015, dipping slightly in 2017 to 20.31%, and rising thereafter to 27.33% by 2019.
- Comparison of Reported and Adjusted Figures
- The minimal differences between reported and adjusted net income and ROE percentages across all years suggest that adjustments had a negligible impact on the company’s financial outcomes. This consistency indicates stability in earnings quality and reliability of financial reporting.
- Overall Trends and Insights
- The company exhibited a robust financial performance improvement over the period analyzed, with increasing profitability and higher returns to equity investors. The dip in 2017 appears to be a temporary setback, as subsequent years demonstrated strong gains. The alignment between adjusted and reported results further underscores the credibility of the financial data and the underlying operational success.
Adjusted Return on Assets (ROA)
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
2019 Calculations
1 ROA = 100 × Net income attributable to Raytheon Company ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Adjusted net income attributable to Raytheon Company ÷ Total assets
= 100 × ÷ =
- Net Income Trends
- The reported net income showed a generally upward trajectory over the five-year period, starting at $2,074 million in 2015 and increasing to $3,343 million by 2019. There was a slight dip in 2017 to $2,024 million from $2,211 million in 2016, followed by a significant rebound in 2018 and continued growth into 2019. The adjusted net income closely mirrored this pattern, with values consistently aligning very closely with reported figures, indicating minimal adjustments affecting the bottom line.
- Return on Assets (ROA) Analysis
- Reported ROA exhibited a similar pattern to net income, with some fluctuation early on. It started at 7.08% in 2015, increased slightly to 7.36% in 2016, then declined to 6.56% in 2017. This decline was followed by a strong recovery to 9.13% in 2018 and further improvement to 9.67% in 2019. Adjusted ROA values were almost identical to reported ROA, indicating that asset utilization efficiency, as measured by both reported and adjusted data, remained consistent and reliable across the period.
- General Insights
- The data suggest overall improving profitability and asset efficiency from 2017 onwards after a brief period of stagnation or decline. The close alignment between reported and adjusted measures implies that adjustments had little impact on the financial outcomes, demonstrating stability and consistency in earnings and asset returns. Growth in net income and ROA in the latter years signals strengthening financial performance and efficient asset management.