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Will Higher Expenses at Collins Aerospace Hurt RTX Q3 Earnings?
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RTX Corp. (RTX - Free Report) is set to release third-quarter 2023 results on Oct 24, before market open.
The company delivered an average earnings surprise of 7.90% in the last four quarters. Steady improvement in air travel as well as solid order growth for military products are likely to benefit RTX’s quarterly results amid higher expenses at Collins Aerospace and Pratt & Whitney segments.
Growing Commercial Sales: A Key Growth Catalyst
A steadily growing commercial air traffic, which resulted in an increase in flight hours, is likely to have boosted RTX’s commercial aftermarket sales across all of its aftermarket sales channels in the third quarter.
On the other hand, increased production rates within wide-body, narrow-body and business jets, buoyed by recovering commercial air passenger travel rates, might have resulted in higher jet engine deliveries. This, is turn, can be expected to have contributed favorably toward the company’s commercial original equipment manufacturer (OEM) sales.
This growth projection, along with RTX’s expanding maintenance, repair and overhaul networks, might have boosted the sales growth expectation for both Pratt & Whitney and Collins’ business segments.
The Zacks Consensus Estimate for Pratt & Whitney’s third-quarter adjusted revenues is pegged at $6,012 million, indicating an improvement of 11.7% from the year-ago quarter’s reported figure. The consensus mark for Collins Aerospace’s adjusted revenues is pinned at $6,305 million, indicating a 23.6% increase from the prior-year quarter’s level.
Solid Outlook for Military Sales
Growing global defense budgets have led RTX to witness solid order growth in the recent past. This, along with a solid F135 production contract volume, can be expected to have bolstered RTX’s revenues from its military business during the soon-to-be reported quarter.
Other Factors to Note
Strong sales performance from the majority of RTX’s businesses, as mentioned above, might have boosted the company’s overall third-quarter revenues.
Higher program expenses at Collins Aerospace, and an increase in research and development spending at the Pratt & Whitney segment on various commercial and military programs, might have had outweighed the positive contribution from solid revenue growth expectations, thereby impacting RTX’s third-quarter earnings.
Q3 Expectations
The Zacks Consensus Estimate for RTX’s third-quarter earnings is pegged at $1.19 per share on revenues of $18.71 billion. While the bottom-line estimate indicates a decline of 1.7% from the year-ago quarter’s reported figure, the top-line estimate implies an improvement of 10.4%.
What Our Model Predicts
Our proven model predicts an earnings beat for RTX 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) to post an earnings beat, and this is the case here.
Currently, RTX has an Earnings ESP of +1.65% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Below are three defense stocks that have the right combination of elements to post an earnings beat this time around.
General Dynamics delivered a four-quarter average earnings surprise of 2.99%. The consensus estimate for earnings is pegged at $2.86 per share, while that for sales is pinned at $9.92 billion.
L3Harris Technologies (LHX - Free Report) is scheduled to release third-quarter results on Oct 26. LHX has an Earnings ESP of +0.86% and a Zacks Rank #3 at present.
L3Harris delivered a four-quarter average negative earnings surprise of 0.67%. The Zacks Consensus Estimate for LHX’s earnings is pegged at $3.07 per share, while that for sales is pinned at $4.83 billion.
Northrop Grumman (NOC - Free Report) is expected to report third-quarter results on Oct 26. NOC has an Earnings ESP of +1.53% and a Zacks Rank #2 at present.
NOC delivered a four-quarter average earnings surprise of 4.38%. The consensus mark for earnings is pegged at $5.77 per share, while that for sales is pinned at $9.68 billion.
Image: Bigstock
Will Higher Expenses at Collins Aerospace Hurt RTX Q3 Earnings?
RTX Corp. (RTX - Free Report) is set to release third-quarter 2023 results on Oct 24, before market open.
The company delivered an average earnings surprise of 7.90% in the last four quarters. Steady improvement in air travel as well as solid order growth for military products are likely to benefit RTX’s quarterly results amid higher expenses at Collins Aerospace and Pratt & Whitney segments.
Growing Commercial Sales: A Key Growth Catalyst
A steadily growing commercial air traffic, which resulted in an increase in flight hours, is likely to have boosted RTX’s commercial aftermarket sales across all of its aftermarket sales channels in the third quarter.
On the other hand, increased production rates within wide-body, narrow-body and business jets, buoyed by recovering commercial air passenger travel rates, might have resulted in higher jet engine deliveries. This, is turn, can be expected to have contributed favorably toward the company’s commercial original equipment manufacturer (OEM) sales.
RTX Corporation Price and EPS Surprise
RTX Corporation price-eps-surprise | RTX Corporation Quote
This growth projection, along with RTX’s expanding maintenance, repair and overhaul networks, might have boosted the sales growth expectation for both Pratt & Whitney and Collins’ business segments.
The Zacks Consensus Estimate for Pratt & Whitney’s third-quarter adjusted revenues is pegged at $6,012 million, indicating an improvement of 11.7% from the year-ago quarter’s reported figure. The consensus mark for Collins Aerospace’s adjusted revenues is pinned at $6,305 million, indicating a 23.6% increase from the prior-year quarter’s level.
Solid Outlook for Military Sales
Growing global defense budgets have led RTX to witness solid order growth in the recent past. This, along with a solid F135 production contract volume, can be expected to have bolstered RTX’s revenues from its military business during the soon-to-be reported quarter.
Other Factors to Note
Strong sales performance from the majority of RTX’s businesses, as mentioned above, might have boosted the company’s overall third-quarter revenues.
Higher program expenses at Collins Aerospace, and an increase in research and development spending at the Pratt & Whitney segment on various commercial and military programs, might have had outweighed the positive contribution from solid revenue growth expectations, thereby impacting RTX’s third-quarter earnings.
Q3 Expectations
The Zacks Consensus Estimate for RTX’s third-quarter earnings is pegged at $1.19 per share on revenues of $18.71 billion. While the bottom-line estimate indicates a decline of 1.7% from the year-ago quarter’s reported figure, the top-line estimate implies an improvement of 10.4%.
What Our Model Predicts
Our proven model predicts an earnings beat for RTX 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) to post an earnings beat, and this is the case here.
Currently, RTX has an Earnings ESP of +1.65% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Below are three defense stocks that have the right combination of elements to post an earnings beat this time around.
General Dynamics (GD - Free Report) is expected to release third-quarter results on Oct 25. GD has an Earnings ESP of +0.55% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
General Dynamics delivered a four-quarter average earnings surprise of 2.99%. The consensus estimate for earnings is pegged at $2.86 per share, while that for sales is pinned at $9.92 billion.
L3Harris Technologies (LHX - Free Report) is scheduled to release third-quarter results on Oct 26. LHX has an Earnings ESP of +0.86% and a Zacks Rank #3 at present.
L3Harris delivered a four-quarter average negative earnings surprise of 0.67%. The Zacks Consensus Estimate for LHX’s earnings is pegged at $3.07 per share, while that for sales is pinned at $4.83 billion.
Northrop Grumman (NOC - Free Report) is expected to report third-quarter results on Oct 26. NOC has an Earnings ESP of +1.53% and a Zacks Rank #2 at present.
NOC delivered a four-quarter average earnings surprise of 4.38%. The consensus mark for earnings is pegged at $5.77 per share, while that for sales is pinned at $9.68 billion.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.