Raytheon Company

Analyst Listing

The following analysts provide coverage for the subject firm as of May 2016:

Broker	Analyst	Analyst Email
Cowen & Company	Cai Von Rumohr	cai.von-rumohr@cowen.com
Bernstein Research	Douglas S. Harned	douglas.harned@bernstein.com
Jefferies	Howard A. Rubel	hrubel@jefferies.com
Wolfe Research	Hunter K. Keay	hkeay@wolferesearch.com
Stifel Nicolaus	Jospeh W. DeNardi	denardij@stifel.com
Deutsche Bank Research	Myles Walton	myles.walton@db.com
CRT Capital Group	Peter Arment	parment@sterneageecrt.com
Drexel Hamilton	Peteral Skibitski	pskibitski@drexelhamilton.com
Buckingham Research	Richard Safran	rsafran@buckresearch.com
Credit Suisse	Robert Spingarn	robert.spingarn@credit-suisse.com
RBC Capital Markets	Robert Stallard	robert.stallard@rbccm.com
Guggenheim Securities	Roman Schwizer	roman.schweizer@guggenheimpartners.com
Wells Fargo Securties	Sam J. Pearlstein	sam.pearlstein@wellsfargo.com

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Primary Input Data

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Derived Input Data

Derived Input	Label	2015 Value	2016 Value	Equational Form
Net Operating Profit Less Adjusted Taxes	NOPLAT	1,864	2,003	$NOPLAT\, =\, EBIT\, x\, (1 \,-\, Avg \,\,Tax\,\, Rate\,\, on\,\, EBIT)$
Free Cash Flow	FCF	1,953	2,291	$FCF\,=NOPLAT\,+\,Non-Cash\,Expenses-\Delta NWC\,-\,NCS$
Tax Shield	TS	61	65	$TS\,=\,Interest\,\,Paid\,\,x\,\, Avg \,\,Tax\,\,Rate\,\, on\,\, Pre-Tax\,\, Income$
Invested Capital	IC	23,155	23,625	$IC\,=\,Fixed\,\,Operating\,\,Assets\,\,+\,\,Net\,\, Working\,\, Capital$
Return on Invested Capital	ROIC	8.05%	8.48%	$ROIC\,=\,\frac { NOPLAT }{ IC }$
Net Investment	NetInv	1,674	985	$NetInv\,=\,{ {IC}_{1}}-{{IC}_{0}}+Depreciation$
Investment Rate	IR	89.83%	49.17%	$IR\,=\,\frac {NetInv}{NOPLAT}$
Weighted Average Cost of Capital	WACC_Market	19.40%	17.00%	$WACC\,=\,\frac { E }{ V } { R }_{ E }\,+\,\frac { P }{ V } { R }_{ P }\,+\,\frac { D }{ V } { R }_{ D }\left( 1- Avg\,\, Tax\,\,Rate\,\,on\,\,Pre-Tax\,\,Income \right)$
Weighted Average Cost of Capital	WACC_Book	7.86%	7.37%
Enterprise value	EV_Market	39,800	44,012	$EV\,=\,Market\,\,Cap\,\,Equity\,+\,\,Long\,\,Term\,\,Debt\,-\,Cash$
Enterprise value	EV_Book	39,162	43,510
Long-Run Growth	g = IR x ROIC	7.23%	4.17%	Long-run growth rates of the income variable are used in the Continuing Value portion of the valuation models.
Long-Run Growth	g = % $\Delta$ GDP	2.50%	2.50%
Margin from Operations	M	12.33%	12.80%	$M\,\,=\,\,\frac{EBIT}{SALES}$
Depreciation/Amortization Rate	D	14.57%	14.32%	$D\,\,=\,\,\frac{D+A}{EBITDA}$

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Valuation Multiple Outcomes

The outcomes presented in this study are the result of original input data, derived data, and synthesized inputs.

Equational Form	Observed Value		Single-stage multiple g solution		Two-stage valuation model g solution
Equational Form	12/31/2015	12/31/2016	12/31/2015	12/31/2016	12/31/2015	12/31/2016
EV/SALES $\frac {EV}{Sales} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)\,(M)$	1.71	1.83	35.18%	26.88%	25.43%	20.42%
EV/EBITDA $\frac {EV}{EBITDA} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)\,(1\,-\,D)$	11.86	12.24	35.18%	26.88%	25.43%	20.42%
EV/NOPLAT $\frac {EV}{NOPLAT} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}$	21.36	21.97	35.18%	26.88%	25.43%	20.42%
EV/FCF_OPS $\frac {EV}{FCF_{OPS}} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)$	20.38	19.21	35.18%	26.88%	25.43%	20.42%
EV/EBIT $\frac {EV}{EBIT} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)$	13.88	14.28	35.18%	26.88%	25.43%	20.42%
EV/IC $\frac {EV}{IC} \,= \,\frac{ROIC\, -\, g}{WACC\,-\,g}$	1.72	1.86	35.18%	26.88%	25.43%	20.42%

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