UTX - Is Raytheon a Buy?
Raytheon (NYSE: RTN) is the exception to the rule among large defense companies, a company focused on electronics, sensors, precision weapons, and cyber instead of large flagship properties like bombers, tanks, or warships. In terms of revenue it is also the smallest of the "big four," a group that also includes Lockheed Martin, General Dynamics, and Northrop Grumman.
But with the world becoming ever more digital, there is value in supplying the brains to these large systems. Raytheon's EBITDA margin over the past year has trailed only Northrop Grumman, an indication that the company is well exposed to the more profitable parts of the defense business.
Raytheon surprised the industry in June when it announced plans to combine with the aerospace arm of United Technologies (NYSE: UTX), a deal that would rank as the most significant defense merger in more than two decades and create a $74 billion aerospace and defense powerhouse.