Intrinsic value of Raytheon - RTN

Previous Close

$188.65

  Intrinsic Value

$243.69

stock screener

  Rating & Target

buy

+29%

Previous close

$188.65

 
Intrinsic value

$243.69

 
Up/down potential

+29%

 
Rating

buy

We calculate the intrinsic value of RTN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 54.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  3.54
  4.20
  4.28
  4.35
  4.42
  4.48
  4.53
  4.57
  4.62
  4.66
  4.69
  4.72
  4.75
  4.77
  4.80
  4.82
  4.84
  4.85
  4.87
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
  4.96
  4.96
Revenue, $m
  24,069
  25,080
  26,153
  27,292
  28,497
  29,772
  31,120
  32,544
  34,047
  35,632
  37,303
  39,064
  40,919
  42,872
  44,929
  47,093
  49,370
  51,766
  54,285
  56,934
  59,719
  62,647
  65,724
  68,959
  72,358
  75,930
  79,682
  83,625
  87,768
  92,119
  96,691
Variable operating expenses, $m
 
  18,096
  18,807
  19,561
  20,360
  21,205
  22,098
  23,041
  24,037
  25,087
  26,194
  25,882
  27,111
  28,406
  29,768
  31,202
  32,711
  34,298
  35,967
  37,722
  39,567
  41,507
  43,546
  45,689
  47,941
  50,308
  52,794
  55,407
  58,151
  61,035
  64,063
Fixed operating expenses, $m
 
  3,579
  3,669
  3,761
  3,855
  3,951
  4,050
  4,151
  4,255
  4,361
  4,470
  4,582
  4,696
  4,814
  4,934
  5,057
  5,184
  5,313
  5,446
  5,582
  5,722
  5,865
  6,012
  6,162
  6,316
  6,474
  6,636
  6,802
  6,972
  7,146
  7,325
Total operating expenses, $m
  20,829
  21,675
  22,476
  23,322
  24,215
  25,156
  26,148
  27,192
  28,292
  29,448
  30,664
  30,464
  31,807
  33,220
  34,702
  36,259
  37,895
  39,611
  41,413
  43,304
  45,289
  47,372
  49,558
  51,851
  54,257
  56,782
  59,430
  62,209
  65,123
  68,181
  71,388
Operating income, $m
  3,240
  3,405
  3,678
  3,970
  4,283
  4,617
  4,973
  5,352
  5,755
  6,184
  6,639
  8,600
  9,111
  9,653
  10,227
  10,834
  11,476
  12,154
  12,872
  13,629
  14,430
  15,274
  16,166
  17,107
  18,100
  19,148
  20,252
  21,417
  22,645
  23,939
  25,303
EBITDA, $m
  3,755
  4,935
  5,210
  5,505
  5,820
  6,157
  6,516
  6,898
  7,304
  7,736
  8,194
  8,681
  9,196
  9,742
  10,320
  10,931
  11,578
  12,261
  12,984
  13,747
  14,553
  15,404
  16,302
  17,250
  18,250
  19,305
  20,417
  21,590
  22,826
  24,129
  25,502
Interest expense (income), $m
  231
  229
  265
  304
  345
  388
  433
  482
  533
  587
  644
  703
  767
  833
  903
  977
  1,055
  1,136
  1,222
  1,312
  1,407
  1,507
  1,612
  1,723
  1,839
  1,960
  2,089
  2,223
  2,365
  2,513
  2,669
Earnings before tax, $m
  3,030
  3,175
  3,412
  3,666
  3,938
  4,229
  4,539
  4,870
  5,222
  5,597
  5,995
  7,896
  8,345
  8,820
  9,323
  9,857
  10,421
  11,018
  11,649
  12,317
  13,022
  13,767
  14,554
  15,385
  16,262
  17,187
  18,164
  19,194
  20,280
  21,426
  22,633
Tax expense, $m
  857
  857
  921
  990
  1,063
  1,142
  1,226
  1,315
  1,410
  1,511
  1,619
  2,132
  2,253
  2,381
  2,517
  2,661
  2,814
  2,975
  3,145
  3,326
  3,516
  3,717
  3,930
  4,154
  4,391
  4,641
  4,904
  5,182
  5,476
  5,785
  6,111
Net income, $m
  2,211
  2,318
  2,491
  2,676
  2,875
  3,087
  3,314
  3,555
  3,812
  4,086
  4,376
  5,764
  6,092
  6,439
  6,806
  7,195
  7,607
  8,043
  8,504
  8,991
  9,506
  10,050
  10,624
  11,231
  11,871
  12,547
  13,259
  14,011
  14,804
  15,641
  16,522

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3,403
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  30,238
  27,960
  29,156
  30,425
  31,769
  33,191
  34,694
  36,281
  37,956
  39,723
  41,586
  43,549
  45,618
  47,795
  50,088
  52,501
  55,039
  57,710
  60,518
  63,471
  66,576
  69,840
  73,271
  76,877
  80,666
  84,648
  88,832
  93,228
  97,846
  102,697
  107,793
Adjusted assets (=assets-cash), $m
  26,835
  27,960
  29,156
  30,425
  31,769
  33,191
  34,694
  36,281
  37,956
  39,723
  41,586
  43,549
  45,618
  47,795
  50,088
  52,501
  55,039
  57,710
  60,518
  63,471
  66,576
  69,840
  73,271
  76,877
  80,666
  84,648
  88,832
  93,228
  97,846
  102,697
  107,793
Revenue / Adjusted assets
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
Average production assets, $m
  1,500
  1,555
  1,622
  1,692
  1,767
  1,846
  1,929
  2,018
  2,111
  2,209
  2,313
  2,422
  2,537
  2,658
  2,786
  2,920
  3,061
  3,209
  3,366
  3,530
  3,703
  3,884
  4,075
  4,275
  4,486
  4,708
  4,940
  5,185
  5,442
  5,711
  5,995
Working capital, $m
  4,346
  978
  1,020
  1,064
  1,111
  1,161
  1,214
  1,269
  1,328
  1,390
  1,455
  1,523
  1,596
  1,672
  1,752
  1,837
  1,925
  2,019
  2,117
  2,220
  2,329
  2,443
  2,563
  2,689
  2,822
  2,961
  3,108
  3,261
  3,423
  3,593
  3,771
Total debt, $m
  5,335
  6,168
  7,063
  8,012
  9,017
  10,081
  11,205
  12,392
  13,645
  14,967
  16,360
  17,829
  19,376
  21,005
  22,720
  24,525
  26,423
  28,421
  30,522
  32,731
  35,053
  37,495
  40,061
  42,758
  45,593
  48,571
  51,700
  54,988
  58,443
  62,071
  65,883
Total liabilities, $m
  20,081
  20,914
  21,809
  22,758
  23,763
  24,827
  25,951
  27,138
  28,391
  29,713
  31,106
  32,575
  34,122
  35,751
  37,466
  39,271
  41,169
  43,167
  45,268
  47,477
  49,799
  52,241
  54,807
  57,504
  60,339
  63,317
  66,446
  69,734
  73,189
  76,817
  80,629
Total equity, $m
  10,157
  7,046
  7,347
  7,667
  8,006
  8,364
  8,743
  9,143
  9,565
  10,010
  10,480
  10,974
  11,496
  12,044
  12,622
  13,230
  13,870
  14,543
  15,251
  15,995
  16,777
  17,600
  18,464
  19,373
  20,328
  21,331
  22,386
  23,493
  24,657
  25,880
  27,164
Total liabilities and equity, $m
  30,238
  27,960
  29,156
  30,425
  31,769
  33,191
  34,694
  36,281
  37,956
  39,723
  41,586
  43,549
  45,618
  47,795
  50,088
  52,501
  55,039
  57,710
  60,519
  63,472
  66,576
  69,841
  73,271
  76,877
  80,667
  84,648
  88,832
  93,227
  97,846
  102,697
  107,793
Debt-to-equity ratio
  0.525
  0.880
  0.960
  1.040
  1.130
  1.210
  1.280
  1.360
  1.430
  1.500
  1.560
  1.620
  1.690
  1.740
  1.800
  1.850
  1.910
  1.950
  2.000
  2.050
  2.090
  2.130
  2.170
  2.210
  2.240
  2.280
  2.310
  2.340
  2.370
  2.400
  2.430
Adjusted equity ratio
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252
  0.252

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,211
  2,318
  2,491
  2,676
  2,875
  3,087
  3,314
  3,555
  3,812
  4,086
  4,376
  5,764
  6,092
  6,439
  6,806
  7,195
  7,607
  8,043
  8,504
  8,991
  9,506
  10,050
  10,624
  11,231
  11,871
  12,547
  13,259
  14,011
  14,804
  15,641
  16,522
Depreciation, amort., depletion, $m
  515
  1,531
  1,533
  1,535
  1,538
  1,540
  1,543
  1,546
  1,549
  1,552
  1,556
  81
  85
  89
  93
  97
  102
  107
  112
  118
  123
  129
  136
  143
  150
  157
  165
  173
  181
  190
  200
Funds from operations, $m
  2,874
  3,849
  4,024
  4,212
  4,413
  4,627
  4,857
  5,101
  5,361
  5,638
  5,932
  5,845
  6,176
  6,527
  6,899
  7,293
  7,709
  8,150
  8,616
  9,109
  9,630
  10,179
  10,760
  11,373
  12,021
  12,704
  13,424
  14,184
  14,986
  15,831
  16,722
Change in working capital, $m
  22
  39
  42
  44
  47
  50
  53
  56
  59
  62
  65
  69
  72
  76
  80
  84
  89
  93
  98
  103
  109
  114
  120
  126
  133
  139
  146
  154
  162
  170
  178
Cash from operations, $m
  2,852
  3,809
  3,982
  4,167
  4,366
  4,578
  4,804
  5,046
  5,303
  5,576
  5,867
  5,776
  6,104
  6,451
  6,819
  7,208
  7,621
  8,057
  8,518
  9,006
  9,521
  10,065
  10,640
  11,247
  11,888
  12,564
  13,278
  14,030
  14,824
  15,661
  16,544
Maintenance CAPEX, $m
  0
  -50
  -52
  -54
  -56
  -59
  -62
  -64
  -67
  -70
  -74
  -77
  -81
  -85
  -89
  -93
  -97
  -102
  -107
  -112
  -118
  -123
  -129
  -136
  -143
  -150
  -157
  -165
  -173
  -181
  -190
New CAPEX, $m
  -625
  -55
  -67
  -71
  -75
  -79
  -84
  -88
  -93
  -98
  -104
  -109
  -115
  -121
  -127
  -134
  -141
  -149
  -156
  -164
  -173
  -182
  -191
  -201
  -211
  -221
  -233
  -244
  -257
  -270
  -283
Cash from investing activities, $m
  53
  -105
  -119
  -125
  -131
  -138
  -146
  -152
  -160
  -168
  -178
  -186
  -196
  -206
  -216
  -227
  -238
  -251
  -263
  -276
  -291
  -305
  -320
  -337
  -354
  -371
  -390
  -409
  -430
  -451
  -473
Free cash flow, $m
  2,905
  3,704
  3,864
  4,043
  4,234
  4,440
  4,659
  4,893
  5,142
  5,408
  5,690
  5,590
  5,908
  6,245
  6,603
  6,981
  7,382
  7,806
  8,255
  8,729
  9,231
  9,760
  10,320
  10,911
  11,535
  12,193
  12,888
  13,621
  14,395
  15,210
  16,070
Issuance/(repayment) of debt, $m
  0
  833
  895
  949
  1,005
  1,063
  1,124
  1,187
  1,253
  1,322
  1,394
  1,469
  1,547
  1,629
  1,715
  1,805
  1,899
  1,997
  2,101
  2,209
  2,323
  2,442
  2,566
  2,697
  2,834
  2,978
  3,129
  3,288
  3,454
  3,629
  3,812
Issuance/(repurchase) of shares, $m
  -996
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -1,080
  833
  895
  949
  1,005
  1,063
  1,124
  1,187
  1,253
  1,322
  1,394
  1,469
  1,547
  1,629
  1,715
  1,805
  1,899
  1,997
  2,101
  2,209
  2,323
  2,442
  2,566
  2,697
  2,834
  2,978
  3,129
  3,288
  3,454
  3,629
  3,812
Total cash flow (excl. dividends), $m
  1,825
  4,537
  4,759
  4,992
  5,240
  5,503
  5,783
  6,080
  6,396
  6,730
  7,083
  7,059
  7,455
  7,874
  8,318
  8,786
  9,281
  9,804
  10,356
  10,938
  11,553
  12,202
  12,886
  13,608
  14,369
  15,172
  16,018
  16,909
  17,849
  18,839
  19,882
Retained Cash Flow (-), $m
  -29
  -292
  -302
  -320
  -339
  -358
  -379
  -400
  -422
  -445
  -469
  -495
  -521
  -549
  -578
  -608
  -640
  -673
  -708
  -744
  -782
  -823
  -865
  -909
  -955
  -1,003
  -1,054
  -1,108
  -1,164
  -1,223
  -1,284
Prev. year cash balance distribution, $m
 
  3,403
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  7,648
  4,457
  4,672
  4,901
  5,145
  5,404
  5,680
  5,973
  6,284
  6,614
  6,564
  6,934
  7,325
  7,740
  8,178
  8,641
  9,131
  9,648
  10,194
  10,771
  11,379
  12,022
  12,699
  13,414
  14,168
  14,963
  15,802
  16,685
  17,616
  18,598
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  7,333
  4,080
  4,066
  4,035
  3,988
  3,922
  3,838
  3,733
  3,610
  3,467
  3,117
  2,959
  2,785
  2,598
  2,401
  2,196
  1,987
  1,777
  1,570
  1,369
  1,177
  997
  832
  683
  551
  437
  339
  258
  192
  140
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Raytheon Company is a technology company, which specializes in defense and other government markets. The Company develops integrated products, services and solutions in various markets, including sensing; effects; command, control, communications, computers, cyber and intelligence; mission support, and cybersecurity. The Company operates through five segments: Integrated Defense Systems (IDS); Intelligence, Information and Services (IIS); Missile Systems (MS); Space and Airborne Systems (SAS), and Forcepoint. The IDS segment develops and produces sensors and mission systems. The IIS segment provides a range of technical and professional services to intelligence, defense, federal and commercial customers. The MS segment is a developer, integrator and producer of missile and combat systems. The SAS segment is engaged in the design, development and manufacture of integrated sensor and communication systems for missions. The Forcepoint segment develops cybersecurity products.

FINANCIAL RATIOS  of  Raytheon (RTN)

Valuation Ratios
P/E Ratio 25
Price to Sales 2.3
Price to Book 5.4
Price to Tangible Book
Price to Cash Flow 19.4
Price to Free Cash Flow 24.8
Growth Rates
Sales Growth Rate 3.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 36.8%
Cap. Spend. - 3 Yr. Gr. Rate 13.7%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 52.5%
Total Debt to Equity 52.5%
Interest Coverage 14
Management Effectiveness
Return On Assets 8%
Ret/ On Assets - 3 Yr. Avg. 8.3%
Return On Total Capital 14.3%
Ret/ On T. Cap. - 3 Yr. Avg. 14.2%
Return On Equity 21.8%
Return On Equity - 3 Yr. Avg. 21.6%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 25.4%
Gross Margin - 3 Yr. Avg. 24.7%
EBITDA Margin 15.7%
EBITDA Margin - 3 Yr. Avg. 15.6%
Operating Margin 13.5%
Oper. Margin - 3 Yr. Avg. 13.4%
Pre-Tax Margin 12.6%
Pre-Tax Margin - 3 Yr. Avg. 12.5%
Net Profit Margin 9.2%
Net Profit Margin - 3 Yr. Avg. 9.3%
Effective Tax Rate 28.3%
Eff/ Tax Rate - 3 Yr. Avg. 27%
Payout Ratio 38.4%

RTN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the RTN stock intrinsic value calculation we used $24069 million for the last fiscal year's total revenue generated by Raytheon. The default revenue input number comes from 2016 income statement of Raytheon. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our RTN stock valuation model: a) initial revenue growth rate of 4.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for RTN is calculated based on our internal credit rating of Raytheon, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Raytheon.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of RTN stock the variable cost ratio is equal to 72.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3492 million in the base year in the intrinsic value calculation for RTN stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.3% for Raytheon.

Corporate tax rate of 27% is the nominal tax rate for Raytheon. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the RTN stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for RTN are equal to 6.2%.

Life of production assets of 31.6 years is the average useful life of capital assets used in Raytheon operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for RTN is equal to 3.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $10157 million for Raytheon - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 290.259 million for Raytheon is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Raytheon at the current share price and the inputted number of shares is $54.8 billion.

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COMPANY NEWS

▶ 5 Industrial Companies Gurus Are Buying   [Dec-13-17 04:08PM  GuruFocus.com]
▶ Better Buy: Raytheon Company vs. Honeywell   [Dec-08-17 09:02AM  Motley Fool]
▶ Raytheon Sees RS Rating Improve To 74   [03:00AM  Investor's Business Daily]
▶ Raytheon Co. Value Analysis (NYSE:RTN) : December 6, 2017   [Dec-06-17 12:21PM  Capital Cube]
▶ Raytheon Could Be Topping Out   [08:42AM  TheStreet.com]
▶ Lockheed's F-35: America's Stealthy Missile Defense Shield?   [Dec-05-17 04:22PM  Investor's Business Daily]
▶ Report Doubts Effectiveness Of Raytheon's Patriot In Recent Attack   [Dec-04-17 04:53PM  Investor's Business Daily]
▶ Raytheon Hits Buy Zone As Romania Buys Patriot; U.S. Arms Sales Surge   [Nov-30-17 04:10PM  Investor's Business Daily]
▶ Missed Lockheed, Raytheon Buy Points? Here's A Second Chance   [Nov-29-17 04:08PM  Investor's Business Daily]
▶ Will Congress OK Saudi Orders For Boeing, Raytheon Weapons?   [Nov-24-17 01:10PM  Investor's Business Daily]
▶ Is Raytheon Company a Buy?   [08:23AM  Motley Fool]
▶ Strong Upside to Sustain for Raytheon   [Nov-22-17 11:07AM  GuruFocus.com]
▶ Raytheon Board: Our Stock Is a Buy   [09:32AM  Motley Fool]
▶ 5 Things Raytheon Wants You to Know   [Nov-16-17 07:32AM  Motley Fool]
▶ Lockheed offers glimpse into missile defenses eyed by Saudis   [Nov-14-17 09:52PM  Associated Press]
▶ Raytheon Wins Another European Patriot Missile Customer   [Nov-12-17 06:04AM  Motley Fool]
▶ 5 Stocks Set To Soar In The Cybersecurity Boom   [Nov-08-17 07:30PM  Oilprice.com]
▶ These Defense Giants Poised To Gain From New Missile Defense Moves   [Nov-07-17 04:54PM  Investor's Business Daily]
▶ [$$] Sweden Seeks Raytheon Missile-Defense System   [01:30PM  The Wall Street Journal]
▶ IQ100 beating the market, up 28%   [Nov-03-17 01:19PM  CNBC Videos]
▶ How To Cut The $1.2 Trillion Price Tag To Beef Up The Nuclear Arsenal   [Nov-01-17 04:12PM  Investor's Business Daily]
▶ ETFs with exposure to Raytheon Co. : October 30, 2017   [Oct-30-17 12:13PM  Capital Cube]
▶ Should You Buy Raytheon Company (RTN) Now?   [Oct-29-17 07:01PM  Simply Wall St.]
▶ Raytheon Reports Mixed Q3 Results, Raises 2017 EPS Outlook   [04:00PM  Investor's Business Daily]
Financial statements of RTN
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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