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Will Higher Interest Cost Hurt Raytheon (RTX) in Q1 Earnings?
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Raytheon Technologies Corp. (RTX - Free Report) is set to release first-quarter 2023 results on Apr 25, before market open.
Raytheon delivered an average earnings surprise of 7.22% in the last four quarters. Steadily growing domestic as well as international travel is likely to benefit first-quarter results amid higher interest expenses’ impact.
Pratt & Whitney and Collins: Key Growth Catalysts
The merger between Raytheon Company and multinational conglomerate United Technologies to form Raytheon Technologies was completed in April 2021. With realized gross cost synergies of $1.4 billion as of 2022-end, RTX exceeded its original synergy commitment from this merger. The company’s first-quarter 2023 results are likely to reflect further benefits from this merger.
Also, cost synergies from the acquisition of Rockwell Collins are likely to bolster RTX’s soon-to-be-reported quarter’s results.
Raytheon Technologies Corporation Price and EPS Surprise
Steadily recovering domestic and growing international travel is likely to have boosted the company’s overall commercial original equipment manufacturer as well as aftermarket sales. This, along with Pratt’s commercial engine business growth and the aforementioned merger-related benefits, must have driven the sales growth expectation for both Pratt & Whitney and Collins business units.
The Zacks Consensus Estimate for Pratt & Whitney’s first-quarter adjusted revenues is pegged at $5,173.3 million, indicating a 14.2% improvement from the year-ago period. The same for Collins Aerospace’s revenues is pegged at $5,421.2 million, indicating a 12.4% increase from the prior-year quarter.
Solid Outlook for Missile and Defense
Growing global budgets have led Raytheon to witness solid order growth in the recent past. This, in turn, must have boosted the Raytheon Missiles & Defense segment’s first-quarter performance. Higher volume in Strategic Missile Defense, including Next Generation Interceptor development and higher volume from advanced technology programs, is likely to have boosted this segment’s top line in the soon-to-be-reported quarter.
The Zacks Consensus Estimate for Missiles & Defense segment’s first-quarter adjusted revenues is pegged at $3,586.9 million, indicating a 1.7% increase from the year-ago period.
Other Factors to Note
Strong sales performance from the majority of Raytheon’s businesses, as mentioned above, must have boosted its first-quarter top-line performance.
Coming to the company’s bottom-line performance, higher interest and corporate expenses are likely to have outweighed the benefits of a solid revenue performance. This, in turn, might have hurt RTX’s overall first-quarter 2023 earnings results.
Q1 Expectations
The Zacks Consensus Estimate for Raytheon Technologies’ first-quarter earnings is pegged at $1.11 per share on revenues of $16.86 billion. While earnings estimates indicate a decline of 3.5%, revenue estimates imply a 7.3% improvement from the year-ago quarter’s reported numbers.
What Our Model Predicts
Our proven model predicts an earnings beat for Raytheon Technologies this time around. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for an earnings beat.
Currently, Raytheon Technologies has an Earnings ESP of +3.60% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Below are three defense stocks that have the right combination for an earnings beat:
Spirit AeroSystems delivered a four-quarter average negative earnings surprise of 157.65%. The bottom-line estimate for SPR is pegged at a loss of 31 cents, indicating a deterioration from the prior-year quarter’s earnings of 3 cents per share.
Embraer (ERJ - Free Report) : The company is scheduled to release first-quarter results on May 3. ERJ has an Earnings ESP of +116.67% and a Zacks Rank #3.
Embraer delivered a four-quarter average earnings surprise of 105.32%. The bottom-line estimate for ERJ is pegged at a loss of 3 cents, indicating an improvement from the prior-year quarter’s loss of 43 cents.
CAE Inc. (CAE - Free Report) is expected to report first-quarter results soon. CAE has an Earnings ESP of +3.85% and a Zacks Rank #3.
CAE delivered a four-quarter average negative earnings surprise of 2.23%. The bottom-line estimate for CAE is pegged at 26 cents, indicating an improvement of 13% from the prior-year quarter.
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Will Higher Interest Cost Hurt Raytheon (RTX) in Q1 Earnings?
Raytheon Technologies Corp. (RTX - Free Report) is set to release first-quarter 2023 results on Apr 25, before market open.
Raytheon delivered an average earnings surprise of 7.22% in the last four quarters. Steadily growing domestic as well as international travel is likely to benefit first-quarter results amid higher interest expenses’ impact.
Pratt & Whitney and Collins: Key Growth Catalysts
The merger between Raytheon Company and multinational conglomerate United Technologies to form Raytheon Technologies was completed in April 2021. With realized gross cost synergies of $1.4 billion as of 2022-end, RTX exceeded its original synergy commitment from this merger. The company’s first-quarter 2023 results are likely to reflect further benefits from this merger.
Also, cost synergies from the acquisition of Rockwell Collins are likely to bolster RTX’s soon-to-be-reported quarter’s results.
Raytheon Technologies Corporation Price and EPS Surprise
Raytheon Technologies Corporation price-eps-surprise | Raytheon Technologies Corporation Quote
Steadily recovering domestic and growing international travel is likely to have boosted the company’s overall commercial original equipment manufacturer as well as aftermarket sales. This, along with Pratt’s commercial engine business growth and the aforementioned merger-related benefits, must have driven the sales growth expectation for both Pratt & Whitney and Collins business units.
The Zacks Consensus Estimate for Pratt & Whitney’s first-quarter adjusted revenues is pegged at $5,173.3 million, indicating a 14.2% improvement from the year-ago period. The same for Collins Aerospace’s revenues is pegged at $5,421.2 million, indicating a 12.4% increase from the prior-year quarter.
Solid Outlook for Missile and Defense
Growing global budgets have led Raytheon to witness solid order growth in the recent past. This, in turn, must have boosted the Raytheon Missiles & Defense segment’s first-quarter performance. Higher volume in Strategic Missile Defense, including Next Generation Interceptor development and higher volume from advanced technology programs, is likely to have boosted this segment’s top line in the soon-to-be-reported quarter.
The Zacks Consensus Estimate for Missiles & Defense segment’s first-quarter adjusted revenues is pegged at $3,586.9 million, indicating a 1.7% increase from the year-ago period.
Other Factors to Note
Strong sales performance from the majority of Raytheon’s businesses, as mentioned above, must have boosted its first-quarter top-line performance.
Coming to the company’s bottom-line performance, higher interest and corporate expenses are likely to have outweighed the benefits of a solid revenue performance. This, in turn, might have hurt RTX’s overall first-quarter 2023 earnings results.
Q1 Expectations
The Zacks Consensus Estimate for Raytheon Technologies’ first-quarter earnings is pegged at $1.11 per share on revenues of $16.86 billion. While earnings estimates indicate a decline of 3.5%, revenue estimates imply a 7.3% improvement from the year-ago quarter’s reported numbers.
What Our Model Predicts
Our proven model predicts an earnings beat for Raytheon Technologies this time around. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for an earnings beat.
Currently, Raytheon Technologies has an Earnings ESP of +3.60% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Below are three defense stocks that have the right combination for an earnings beat:
Spirit AeroSystems (SPR - Free Report) : The company is expected to release first-quarter results on May 3. SPR has an Earnings ESP of +16.58% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Spirit AeroSystems delivered a four-quarter average negative earnings surprise of 157.65%. The bottom-line estimate for SPR is pegged at a loss of 31 cents, indicating a deterioration from the prior-year quarter’s earnings of 3 cents per share.
Embraer (ERJ - Free Report) : The company is scheduled to release first-quarter results on May 3. ERJ has an Earnings ESP of +116.67% and a Zacks Rank #3.
Embraer delivered a four-quarter average earnings surprise of 105.32%. The bottom-line estimate for ERJ is pegged at a loss of 3 cents, indicating an improvement from the prior-year quarter’s loss of 43 cents.
CAE Inc. (CAE - Free Report) is expected to report first-quarter results soon. CAE has an Earnings ESP of +3.85% and a Zacks Rank #3.
CAE delivered a four-quarter average negative earnings surprise of 2.23%. The bottom-line estimate for CAE is pegged at 26 cents, indicating an improvement of 13% from the prior-year quarter.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.