Raytheon (RTN) & BWX Technologies (BWXT) Critical Analysis

BWX Technologies (NYSE: BWXT) and Raytheon (NYSE:RTN) are both mid-cap computer and technology companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, institutional ownership, dividends, earnings, profitabiliy, analyst recommendations and risk.

Risk & Volatility

BWX Technologies has a beta of 0.44, suggesting that its share price is 56% less volatile than the S&P 500. Comparatively, Raytheon has a beta of 0.58, suggesting that its share price is 42% less volatile than the S&P 500.

Earnings and Valuation

This table compares BWX Technologies and Raytheon’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
BWX Technologies $1.61 billion 3.26 $316.03 million $1.83 28.95
Raytheon $24.27 billion 2.06 $3.82 billion $7.26 23.69

Raytheon has higher revenue and earnings than BWX Technologies. Raytheon is trading at a lower price-to-earnings ratio than BWX Technologies, indicating that it is currently the more affordable of the two stocks.

Dividends

BWX Technologies pays an annual dividend of $0.44 per share and has a dividend yield of 0.8%. Raytheon pays an annual dividend of $3.19 per share and has a dividend yield of 1.9%. BWX Technologies pays out 24.0% of its earnings in the form of a dividend. Raytheon pays out 43.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. BWX Technologies has raised its dividend for 12 consecutive years.

Analyst Ratings

This is a breakdown of recent ratings and target prices for BWX Technologies and Raytheon, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BWX Technologies 0 1 4 0 2.80
Raytheon 0 1 11 0 2.92

BWX Technologies presently has a consensus target price of $51.40, indicating a potential downside of 2.96%. Raytheon has a consensus target price of $166.18, indicating a potential downside of 3.39%. Given BWX Technologies’ higher possible upside, research analysts plainly believe BWX Technologies is more favorable than Raytheon.

Institutional and Insider Ownership

95.1% of BWX Technologies shares are owned by institutional investors. Comparatively, 74.8% of Raytheon shares are owned by institutional investors. 0.8% of BWX Technologies shares are owned by insiders. Comparatively, 0.2% of Raytheon shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares BWX Technologies and Raytheon’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BWX Technologies 11.63% 98.16% 12.64%
Raytheon 8.68% 20.74% 7.24%

Summary

BWX Technologies beats Raytheon on 10 of the 17 factors compared between the two stocks.

About BWX Technologies

BWX Technologies, Inc. is a manufacturer of nuclear components and a service provider. The Company’s businesses focus on the design, engineering and manufacture of precision naval nuclear components, reactors and nuclear fuel for the United States Government. Its segments include Nuclear Operations, Technical Services, Nuclear Energy and Other. It provides uranium processing and environmental site restoration services, as well as a range of products and services to customers in the nuclear power industry. Nuclear Operations engineers, designs and manufactures precision naval nuclear components and reactors for the United States Department of Energy/National Nuclear Security Administration’s Naval Nuclear Propulsion Program. Technical Services provides various services to the United States Government. Nuclear Energy designs, licenses, manufactures and delivers commercial nuclear steam generators, pressure vessels, reactor components, heat exchangers and other auxiliary equipment.

About Raytheon

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.

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