Common Stock Valuation Ratios (Price Multiples)
Valuation ratios measure the quantity of an asset or flaw (e.g., earnings) associated with ownership of a specified claim (e.g., a share of ownership of the enterprise).
Current Valuation Ratios
Raytheon Co., current price multiples
| Raytheon Co. | Boeing Co. | Caterpillar Inc. | Eaton Corp. plc | GE Aerospace | Honeywell International Inc. | Lockheed Martin Corp. | RTX Corp. | ||
|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||
| Current share price (P) | $229.76 | ||||||||
| No. shares of common stock outstanding | 278,441,000 | ||||||||
| Growth rate (g) | 14.38% | ||||||||
| Earnings per share (EPS) | $12.01 | ||||||||
| Next year expected EPS | $13.73 | ||||||||
| Operating profit per share | $17.15 | ||||||||
| Sales per share | $104.78 | ||||||||
| Book value per share (BVPS) | $43.90 | ||||||||
| Valuation Ratios (Price Multiples) | |||||||||
| Price to earnings (P/E) | 19.14 | 80.41 | 42.76 | 41.56 | 37.24 | 14.33 | 23.25 | 37.04 | |
| Price to next year expected earnings | 16.73 | 15,692.57 | 32.36 | 38.07 | 36.60 | 12.54 | 17.00 | 36.29 | |
| Price-earnings-growth (PEG) | 1.33 | — | 1.33 | 4.54 | 21.39 | 1.01 | 0.63 | 17.97 | |
| Price to operating profit (P/OP) | 13.40 | 35.50 | 34.06 | 32.61 | 29.42 | 12.16 | 15.09 | 26.81 | |
| Price to sales (P/S) | 2.19 | 1.70 | 5.94 | 6.19 | 7.66 | 1.81 | 1.55 | 2.81 | |
| Price to book value (P/BV) | 5.23 | 27.86 | 17.82 | 8.74 | 17.35 | 4.87 | 17.36 | 3.82 | |
Based on: 10-K (reporting date: 2019-12-31).
If the company price multiple is lower then the price multiple of benchmark then company stock is relatively undervalued.
Otherwise, if the company price multiple is higher then the price multiple of benchmark then company stock is relatively overvalued.
Historical Valuation Ratios (Summary)
Raytheon Co., historical price multiples
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 valuation ratios for the period between 2015 and 2019 exhibit a consistent pattern of volatility, characterized by a significant peak in valuation multiples during 2017 followed by a contraction in 2018 and a moderate recovery in 2019.
- Earnings and Operating Profit Multiples
- The Price to earnings (P/E) ratio increased from 18.25 in 2015 to a peak of 30.30 in 2017, representing a substantial expansion in the multiple assigned to earnings. This was followed by a sharp decline to 17.56 in 2018, before stabilizing at 19.14 in 2019. A mirrored trend is observed in the Price to operating profit (P/OP) ratio, which rose from 12.56 in 2015 to 18.48 in 2017, dropped to 11.25 in 2018, and returned to 13.40 by 2019. The close correlation between these two metrics suggests that valuation fluctuations were driven by factors affecting the overall market perception of profitability rather than isolated non-operating items.
- Revenue and Asset Multiples
- The Price to sales (P/S) ratio demonstrated a general upward trajectory over the five-year period, starting at 1.63 in 2015 and ending at 2.19 in 2019, despite a temporary dip in 2018 to 1.89. Similarly, the Price to book value (P/BV) ratio experienced a marked increase from 3.74 in 2015 to a high of 6.16 in 2017. After a correction to 4.45 in 2018, the ratio rose again to 5.23 in 2019, indicating that the market maintained a higher premium on the company's book value at the end of the period compared to the start.
- Comparative Valuation Analysis
- A uniform trend is evident across all four valuation metrics, as each reached its maximum value in 2017. The simultaneous spike in P/E, P/OP, P/S, and P/BV suggests a period of significant stock price appreciation relative to the company's financial fundamentals during that year. The subsequent contraction in 2018 indicates a market-wide or company-specific correction, while the 2019 data reflects a partial rebound toward the higher valuation levels seen in 2017.
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Price to Earnings (P/E)
Raytheon Co., historical P/E calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 278,441,000 | 282,239,000 | 288,506,000 | 292,880,000 | 298,998,000 | |
| Selected Financial Data (US$) | ||||||
| Net income attributable to Raytheon Company (in millions) | 3,343) | 2,909) | 2,024) | 2,211) | 2,074) | |
| Earnings per share (EPS)2 | 12.01 | 10.31 | 7.02 | 7.55 | 6.94 | |
| Share price1, 3 | 229.76 | 180.94 | 212.58 | 151.96 | 126.57 | |
| Valuation Ratio | ||||||
| P/E ratio4 | 19.14 | 17.56 | 30.30 | 20.13 | 18.25 | |
| Benchmarks | ||||||
| P/E Ratio, Competitors5 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | |
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).
1 Data adjusted for splits and stock dividends.
2 2019 Calculation
EPS = Net income attributable to Raytheon Company ÷ No. shares of common stock outstanding
= 3,343,000,000 ÷ 278,441,000 = 12.01
3 Closing price as at the filing date of Raytheon Co. Annual Report.
4 2019 Calculation
P/E ratio = Share price ÷ EPS
= 229.76 ÷ 12.01 = 19.14
5 Click competitor name to see calculations.
The valuation multiples from 2015 to 2019 exhibit a period of relative stability interrupted by a significant deviation in 2017. While both the share price and earnings per share followed a general upward trajectory over the five-year duration, the price-to-earnings (P/E) ratio fluctuated based on the correlation between market pricing and realized profitability.
- Earnings and Share Price Trends
- The share price demonstrated overall growth, rising from 126.57 in 2015 to 229.76 by 2019. Earnings per share (EPS) also increased over the period, starting at 6.94 and reaching 12.01 in 2019. A notable acceleration in earnings growth is observed between 2017 and 2019, during which EPS rose from 7.02 to 12.01.
- P/E Ratio Volatility and Peak
- The P/E ratio remained consistently between 17.56 and 20.13 for four of the five years analyzed. A significant outlier occurred in 2017, when the ratio spiked to 30.30. This peak was the result of a sharp increase in the share price to 212.58 occurring simultaneously with a slight decline in EPS to 7.02, indicating a temporary disconnect where the market valuation significantly outpaced earnings growth.
- Valuation Correction and Stabilization
- A normalization of the P/E ratio occurred in 2018, falling to 17.56. This adjustment was driven by a decrease in share price to 180.94 coupled with a substantial increase in EPS to 10.31. By 2019, the P/E ratio stabilized at 19.14, suggesting a return to a valuation equilibrium as the share price recovered to 229.76 and earnings continued to climb to 12.01.
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Price to Operating Profit (P/OP)
Raytheon Co., historical P/OP calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 278,441,000 | 282,239,000 | 288,506,000 | 292,880,000 | 298,998,000 | |
| Selected Financial Data (US$) | ||||||
| Operating income (in millions) | 4,774) | 4,538) | 3,318) | 3,240) | 3,013) | |
| Operating profit per share2 | 17.15 | 16.08 | 11.50 | 11.06 | 10.08 | |
| Share price1, 3 | 229.76 | 180.94 | 212.58 | 151.96 | 126.57 | |
| Valuation Ratio | ||||||
| P/OP ratio4 | 13.40 | 11.25 | 18.48 | 13.74 | 12.56 | |
| Benchmarks | ||||||
| P/OP Ratio, Competitors5 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 Data adjusted for splits and stock dividends.
2 2019 Calculation
Operating profit per share = Operating income ÷ No. shares of common stock outstanding
= 4,774,000,000 ÷ 278,441,000 = 17.15
3 Closing price as at the filing date of Raytheon Co. Annual Report.
4 2019 Calculation
P/OP ratio = Share price ÷ Operating profit per share
= 229.76 ÷ 17.15 = 13.40
5 Click competitor name to see calculations.
The analysis of valuation multiples between 2015 and 2019 reveals a period of consistent growth in operational efficiency contrasted by fluctuations in market valuation.
- Operating Profitability Trends
- Operating profit per share demonstrated a steady upward trajectory throughout the five-year period, increasing from 10.08 US$ in 2015 to 17.15 US$ in 2019. A significant acceleration in profit growth is observed between 2017 and 2018, where the value rose from 11.50 US$ to 16.08 US$, representing a substantial increase in operational earnings per share.
- Share Price Volatility
- The share price generally trended upward, starting at 126.57 US$ in 2015 and reaching its highest point of 229.76 US$ in 2019. However, this growth was non-linear, as a price correction occurred in 2018, with the value dropping to 180.94 US$ from a 2017 peak of 212.58 US$.
- Price to Operating Profit (P/OP) Analysis
- The P/OP ratio exhibited notable variability, reflecting changes in market sentiment relative to operational performance. The ratio peaked in 2017 at 18.48, indicating the highest premium paid per unit of operating profit during the period. In 2018, the ratio contracted sharply to 11.25, the lowest point in the series. This decline is particularly significant as it occurred simultaneously with a sharp increase in operating profit per share, suggesting that the decrease in share price outweighed the operational gains. By 2019, the ratio recovered to 13.40, aligning with the recovery in the share price.
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Price to Sales (P/S)
Raytheon Co., historical P/S calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 278,441,000 | 282,239,000 | 288,506,000 | 292,880,000 | 298,998,000 | |
| Selected Financial Data (US$) | ||||||
| Net sales (in millions) | 29,176) | 27,058) | 25,348) | 24,069) | 23,247) | |
| Sales per share2 | 104.78 | 95.87 | 87.86 | 82.18 | 77.75 | |
| Share price1, 3 | 229.76 | 180.94 | 212.58 | 151.96 | 126.57 | |
| Valuation Ratio | ||||||
| P/S ratio4 | 2.19 | 1.89 | 2.42 | 1.85 | 1.63 | |
| Benchmarks | ||||||
| P/S Ratio, Competitors5 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | |
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).
1 Data adjusted for splits and stock dividends.
2 2019 Calculation
Sales per share = Net sales ÷ No. shares of common stock outstanding
= 29,176,000,000 ÷ 278,441,000 = 104.78
3 Closing price as at the filing date of Raytheon Co. Annual Report.
4 2019 Calculation
P/S ratio = Share price ÷ Sales per share
= 229.76 ÷ 104.78 = 2.19
5 Click competitor name to see calculations.
The analysis of valuation metrics from 2015 to 2019 reveals a general expansion in the price-to-sales (P/S) multiple, underpinned by consistent growth in sales per share and variable movements in the share price.
- Sales per Share Trend
- A consistent upward trajectory is observed in sales per share, which increased annually from US$ 77.75 in 2015 to US$ 104.78 in 2019. This steady growth indicates a sustained improvement in revenue generation on a per-share basis throughout the period.
- Share Price Performance
- The share price exhibited significant volatility, rising from US$ 126.57 in 2015 to a peak of US$ 212.58 in 2017. A correction occurred in 2018, with the price declining to US$ 180.94, followed by a recovery to a period high of US$ 229.76 by the end of 2019.
- Price-to-Sales (P/S) Ratio Analysis
- The P/S ratio fluctuated in alignment with share price movements rather than sales growth. The ratio rose from 1.63 in 2015 to a peak of 2.42 in 2017, indicating an increase in the market valuation premium relative to revenue. A subsequent decline to 1.89 in 2018 mirrored the drop in share price, before the ratio recovered to 2.19 in 2019. The overall increase in the P/S ratio over the five-year span suggests that investor sentiment and share price appreciation outpaced the steady growth in sales per share.
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Price to Book Value (P/BV)
Raytheon Co., historical P/BV calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 278,441,000 | 282,239,000 | 288,506,000 | 292,880,000 | 298,998,000 | |
| Selected Financial Data (US$) | ||||||
| Total Raytheon Company stockholders’ equity (in millions) | 12,223) | 11,472) | 9,963) | 10,066) | 10,128) | |
| Book value per share (BVPS)2 | 43.90 | 40.65 | 34.53 | 34.37 | 33.87 | |
| Share price1, 3 | 229.76 | 180.94 | 212.58 | 151.96 | 126.57 | |
| Valuation Ratio | ||||||
| P/BV ratio4 | 5.23 | 4.45 | 6.16 | 4.42 | 3.74 | |
| Benchmarks | ||||||
| P/BV Ratio, Competitors5 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 Data adjusted for splits and stock dividends.
2 2019 Calculation
BVPS = Total Raytheon Company stockholders’ equity ÷ No. shares of common stock outstanding
= 12,223,000,000 ÷ 278,441,000 = 43.90
3 Closing price as at the filing date of Raytheon Co. Annual Report.
4 2019 Calculation
P/BV ratio = Share price ÷ BVPS
= 229.76 ÷ 43.90 = 5.23
5 Click competitor name to see calculations.
The valuation of the company's common stock relative to its book value exhibited significant volatility between 2015 and 2019. While the underlying book value per share grew steadily throughout the period, the market price fluctuated more aggressively, leading to a non-linear trend in the price-to-book value (P/BV) ratio.
- Book Value per Share (BVPS) Trend
- A consistent upward trajectory is observed in the book value per share, which rose from 33.87 US$ in 2015 to 43.90 US$ in 2019. The growth was gradual between 2015 and 2017, followed by a more pronounced increase in 2018 and 2019, suggesting a strengthening of the company's net asset base per share.
- Share Price Performance
- The share price demonstrated a general increase over the five-year period, ascending from 126.57 US$ in 2015 to a peak of 229.76 US$ in 2019. A notable deviation occurred in 2018, where the price contracted to 180.94 US$ from a previous high of 212.58 US$ in 2017, before rebounding strongly in the final year.
- Price-to-Book Value (P/BV) Analysis
- The P/BV ratio experienced substantial fluctuations, peaking at 6.16 in 2017. This peak represents the highest market premium over book value during the analyzed period. In 2018, the ratio corrected sharply to 4.45, a decline driven by the simultaneous drop in share price and an increase in book value. By 2019, the ratio recovered to 5.23, indicating that investors once again placed a higher premium on the company's assets compared to 2018 levels.
Overall, the data indicates that the market valuation of the stock is not tightly correlated with the growth of the book value. The fluctuations in the P/BV ratio suggest that investor sentiment and external market factors played a more dominant role in determining the share price than the incremental growth of the company's accounting equity.
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