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Why Is Raytheon Technologies (RTX) Up 4.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Raytheon Technologies (RTX - Free Report) . Shares have added about 4.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Raytheon Technologies due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Raytheon Technologies’ Q1 Earnings Beat, Sales Miss
Raytheon Technologies first-quarter 2021 adjusted earnings per share (EPS) of 90 cents outpaced the Zacks Consensus Estimate of 88 cents by 2.3%. However, the bottom-line figure declined 32.3% from the year-ago quarter’s adjusted earnings of $1.33.
Including one-time items, the company reported GAAP earnings of 51 cents compared with 50 cents per share in the year-ago quarter.
The year-over-year improvement in the bottom line is attributable to higher year-over-year revenues generated in the reported quarter.
Operational Performance
Raytheon Technologies’ first-quarter sales of $15,251 million missed the Zacks Consensus Estimate of $15,379 million by 0.8%. The sales figure however increased 34.3% from $11,360 million recorded in the year-ago quarter.
Total costs and expenses increased 42.3% year over year to $14,346 million. The company generated operating profit of $1,013 million compared with $1.295 million in the year-ago quarter.
Segmental Performance
Collins Aerospace: Adjusted sales at this segment plunged 32% year over year to $4,370 million in first-quarter 2021 due to lower commercial OEM sales, military sales as well as commercial aftermarket sales.
Its adjusted operating income came in at $314 million compared with the year-ago quarter’s level of $1,246 million.
Pratt & Whitney: Adjusted sales at this segment declined 24% year over year to $4,030 million due to a significant reduction in shop visits and related spare part sales as well as lower commercial engine deliveries.
Its adjusted operating profit was $20 million compared with the year-ago quarter’s operating income of $475 million.
Raytheon Intelligence & Space: This segment recorded first-quarter sales of $3,765 million and generated $388 million of adjusted operating profit.
Raytheon Missiles & Defense: This unit recorded sales of $3,793 million and $496 million of adjusted operating profit in the quarter.
Financial Update
Raytheon Technologies had cash and cash equivalents of $8,579 million as of Mar 31, 2021 , compared with $8,802 million as of Dec 31, 2020.
Long-term debt was $29,935 million, as of Mar 31, 2021, down from $31,026 million as of Dec 31, 2020.
Net cash inflow from operating activities amounted to $723 million at the end of first-quarter 2021 compared with $1,132 million at the end of first-quarter 2020.
Its free cash flow was $336 million compared with $807 million at the end of first-quarter 2020.
Guidance
Raytheon Technologies has raised the lower end of its revenue and earnings view for 2021.
The company currently projects to generate EPS in the range of $3.50-$3.70, compared with the earlier guidance of $3.40-$3.70. The Zacks Consensus Estimate for EPS, pegged at $3.64, lies above the mid-point of the newly guided range.
The company currently expects to record revenues in the band of $63.9-$65.4 billion, compared with the prior guidance of $63.4-$65.4 billion. The Zacks Consensus Estimate for revenues, pegged at $65.13 billion, is higher than the mid-point of the guided range.
The company continues to expect to generate free cash flow worth $4.5 billion during 2021.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 15.25% due to these changes.
VGM Scores
Currently, Raytheon Technologies has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Raytheon Technologies has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Raytheon Technologies (RTX) Up 4.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Raytheon Technologies (RTX - Free Report) . Shares have added about 4.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Raytheon Technologies due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Raytheon Technologies’ Q1 Earnings Beat, Sales Miss
Raytheon Technologies first-quarter 2021 adjusted earnings per share (EPS) of 90 cents outpaced the Zacks Consensus Estimate of 88 cents by 2.3%. However, the bottom-line figure declined 32.3% from the year-ago quarter’s adjusted earnings of $1.33.
Including one-time items, the company reported GAAP earnings of 51 cents compared with 50 cents per share in the year-ago quarter.
The year-over-year improvement in the bottom line is attributable to higher year-over-year revenues generated in the reported quarter.
Operational Performance
Raytheon Technologies’ first-quarter sales of $15,251 million missed the Zacks Consensus Estimate of $15,379 million by 0.8%. The sales figure however increased 34.3% from $11,360 million recorded in the year-ago quarter.
Total costs and expenses increased 42.3% year over year to $14,346 million. The company generated operating profit of $1,013 million compared with $1.295 million in the year-ago quarter.
Segmental Performance
Collins Aerospace: Adjusted sales at this segment plunged 32% year over year to $4,370 million in first-quarter 2021 due to lower commercial OEM sales, military sales as well as commercial aftermarket sales.
Its adjusted operating income came in at $314 million compared with the year-ago quarter’s level of $1,246 million.
Pratt & Whitney: Adjusted sales at this segment declined 24% year over year to $4,030 million due to a significant reduction in shop visits and related spare part sales as well as lower commercial engine deliveries.
Its adjusted operating profit was $20 million compared with the year-ago quarter’s operating income of $475 million.
Raytheon Intelligence & Space: This segment recorded first-quarter sales of $3,765 million and generated $388 million of adjusted operating profit.
Raytheon Missiles & Defense: This unit recorded sales of $3,793 million and $496 million of adjusted operating profit in the quarter.
Financial Update
Raytheon Technologies had cash and cash equivalents of $8,579 million as of Mar 31, 2021 , compared with $8,802 million as of Dec 31, 2020.
Long-term debt was $29,935 million, as of Mar 31, 2021, down from $31,026 million as of Dec 31, 2020.
Net cash inflow from operating activities amounted to $723 million at the end of first-quarter 2021 compared with $1,132 million at the end of first-quarter 2020.
Its free cash flow was $336 million compared with $807 million at the end of first-quarter 2020.
Guidance
Raytheon Technologies has raised the lower end of its revenue and earnings view for 2021.
The company currently projects to generate EPS in the range of $3.50-$3.70, compared with the earlier guidance of $3.40-$3.70. The Zacks Consensus Estimate for EPS, pegged at $3.64, lies above the mid-point of the newly guided range.
The company currently expects to record revenues in the band of $63.9-$65.4 billion, compared with the prior guidance of $63.4-$65.4 billion. The Zacks Consensus Estimate for revenues, pegged at $65.13 billion, is higher than the mid-point of the guided range.
The company continues to expect to generate free cash flow worth $4.5 billion during 2021.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 15.25% due to these changes.
VGM Scores
Currently, Raytheon Technologies has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Raytheon Technologies has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.