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Will Higher Interest Expenses Impact RTX in Q4 Earnings?
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RTX Corp. (RTX - Free Report) is set to release fourth-quarter 2023 results on Jan 23, before market open.
The company delivered an average earnings surprise of 6.91% in the last four quarters. Steady recovery in commercial air traffic as well as solid order growth for military products are likely to benefit RTX’s quarterly results amid higher research and development expenses at its Pratt & Whitney segment as well as higher interest expenses.
Growing Commercial Sales: A Key Growth Catalyst
Continued recovery witnessed in commercial air traffic, which resulted in an increase in flight hours, is likely to have boosted RTX’s commercial aftermarket sales across each of its aftermarket sales channels in the fourth quarter.
On the other hand, increased demand for wide-body, narrow-body, and business jets, buoyed by recovering commercial air passenger travel rates, must have resulted in the production ramp-up of jet engines. This, is turn, can be expected to have contributed favorably toward the company’s commercial original equipment manufacturer (OEM) sales.
Such impressive expectations for commercial OEM and aftermarket sales growth, along with RTX’s expanding maintenance, repair and overhaul networks, might have boosted the sales growth expectation for both Pratt & Whitney and Collins Aerospace business segments.
The Zacks Consensus Estimate for Pratt & Whitney’s fourth-quarter adjusted revenues is pegged at $6,426.2 million, indicating an improvement of 13.7% from the year-ago quarter’s reported figure. The consensus mark for Collins Aerospace’s adjusted revenues is pinned at $7,146.3 million, indicating a 26.2% 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 higher F135 development and sustainment 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 fourth-quarter revenues.
Lower pension income, a higher effective tax rate, higher interest expense as well as increased research and development expenses at the Pratt & Whitney segment on various commercial and military programs might have outweighed the positive contribution from solid revenue growth expectations, thereby impacting RTX’s fourth-quarter earnings.
Q4 Expectations
The Zacks Consensus Estimate for RTX’s fourth-quarter earnings is pegged at $1.25 per share on revenues of $19.83 billion. While the bottom-line estimate indicates a decline of 1.6% from the year-ago quarter’s reported figure, the top-line estimate implies an improvement of 9.6%.
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 +0.02% 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 other defense stocks that also have the right combination of elements to post an earnings beat this time around.
Boeing delivered a four-quarter average negative earnings surprise of 903.50%. The consensus estimate for fourth-quarter loss is pegged at 72 cents per share, while that for sales is pinned at $21.23 billion.
L3Harris Technologies (LHX - Free Report) is scheduled to release fourth-quarter results on Jan 25. LHX has an Earnings ESP of +0.09% and a Zacks Rank #3 at present.
L3Harris delivered a four-quarter average earnings surprise of 1.70%. The Zacks Consensus Estimate for LHX’s fourth-quarter earnings is pegged at $3.31 per share, while that for sales is pinned at $5.29 billion.
Northrop Grumman (NOC - Free Report) is slated to report fourth-quarter results on Jan 25. NOC has an Earnings ESP of +1.49% and a Zacks Rank #3 at present.
NOC delivered a four-quarter average earnings surprise of 6.79%. The consensus mark for NOC’s fourth-quarter earnings is pegged at $5.75 per share, while that for sales is pinned at $10.44 billion.
Image: Bigstock
Will Higher Interest Expenses Impact RTX in Q4 Earnings?
RTX Corp. (RTX - Free Report) is set to release fourth-quarter 2023 results on Jan 23, before market open.
The company delivered an average earnings surprise of 6.91% in the last four quarters. Steady recovery in commercial air traffic as well as solid order growth for military products are likely to benefit RTX’s quarterly results amid higher research and development expenses at its Pratt & Whitney segment as well as higher interest expenses.
Growing Commercial Sales: A Key Growth Catalyst
Continued recovery witnessed in commercial air traffic, which resulted in an increase in flight hours, is likely to have boosted RTX’s commercial aftermarket sales across each of its aftermarket sales channels in the fourth quarter.
RTX Corporation Price and EPS Surprise
RTX Corporation price-eps-surprise | RTX Corporation Quote
On the other hand, increased demand for wide-body, narrow-body, and business jets, buoyed by recovering commercial air passenger travel rates, must have resulted in the production ramp-up of jet engines. This, is turn, can be expected to have contributed favorably toward the company’s commercial original equipment manufacturer (OEM) sales.
Such impressive expectations for commercial OEM and aftermarket sales growth, along with RTX’s expanding maintenance, repair and overhaul networks, might have boosted the sales growth expectation for both Pratt & Whitney and Collins Aerospace business segments.
The Zacks Consensus Estimate for Pratt & Whitney’s fourth-quarter adjusted revenues is pegged at $6,426.2 million, indicating an improvement of 13.7% from the year-ago quarter’s reported figure. The consensus mark for Collins Aerospace’s adjusted revenues is pinned at $7,146.3 million, indicating a 26.2% 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 higher F135 development and sustainment 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 fourth-quarter revenues.
Lower pension income, a higher effective tax rate, higher interest expense as well as increased research and development expenses at the Pratt & Whitney segment on various commercial and military programs might have outweighed the positive contribution from solid revenue growth expectations, thereby impacting RTX’s fourth-quarter earnings.
Q4 Expectations
The Zacks Consensus Estimate for RTX’s fourth-quarter earnings is pegged at $1.25 per share on revenues of $19.83 billion. While the bottom-line estimate indicates a decline of 1.6% from the year-ago quarter’s reported figure, the top-line estimate implies an improvement of 9.6%.
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 +0.02% 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 other defense stocks that also have the right combination of elements to post an earnings beat this time around.
The Boeing Company (BA - Free Report) is slated to release fourth-quarter results on Jan 31. BA has an Earnings ESP of +12.32% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Boeing delivered a four-quarter average negative earnings surprise of 903.50%. The consensus estimate for fourth-quarter loss is pegged at 72 cents per share, while that for sales is pinned at $21.23 billion.
L3Harris Technologies (LHX - Free Report) is scheduled to release fourth-quarter results on Jan 25. LHX has an Earnings ESP of +0.09% and a Zacks Rank #3 at present.
L3Harris delivered a four-quarter average earnings surprise of 1.70%. The Zacks Consensus Estimate for LHX’s fourth-quarter earnings is pegged at $3.31 per share, while that for sales is pinned at $5.29 billion.
Northrop Grumman (NOC - Free Report) is slated to report fourth-quarter results on Jan 25. NOC has an Earnings ESP of +1.49% and a Zacks Rank #3 at present.
NOC delivered a four-quarter average earnings surprise of 6.79%. The consensus mark for NOC’s fourth-quarter earnings is pegged at $5.75 per share, while that for sales is pinned at $10.44 billion.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.