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Why Is RTX (RTX) Up 0.8% Since Last Earnings Report?

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A month has gone by since the last earnings report for RTX (RTX - Free Report) . Shares have added about 0.8% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is RTX 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.

RTX Q4 Earnings Surpass Estimates by 3%, Sales Increase Y/Y

RTX Corporation’s fourth-quarter 2023 adjusted earnings per share (EPS) of $1.29 beat the Zacks Consensus Estimate of $1.25 by 3.2%. The bottom line also improved 1.6% from the year-ago quarter’s level of $1.27.

Including one-time items, the company reported GAAP earnings of $1.05 per share compared with 96 cents reported in the prior-year quarter.

The company’s 2023 adjusted EPS of $5.06 beat the Zacks Consensus Estimate of $5.01 by 1%. The full-year bottom line also improved 5.9% from the year-ago level of $4.78.

Operational Performance

RTX’s fourth-quarter adjusted sales totaled $19,824 million. The company reported GAAP sales of $19,927 million compared with $18,093 million in the fourth quarter of 2022.

The Zacks Consensus Estimate is pegged at $19,830 million.

The company’s 2023 adjusted sales of $74.31 billion beat the Zacks Consensus Estimate of $74.18 billion by 0.2%.

Total costs and expenses increased 9% year over year to $18,120 million. The company generated an operating profit of $1,777 million compared with $1,491 million in the prior-year quarter.

Segmental Performance

Collins Aerospace: Adjusted sales at this segment totaled $7,008 million. This unit’s GAAP sales improved 14% year over year to $7,120 million.  This improvement can be attributed to higher commercial aftermarket and commercial OEM sales, backed by strong demand across commercial aerospace end markets. Increased military sales driven by favorable timing of deliveries also benefited this unit’s sales.

The adjusted operating income totaled $1,035 million compared with the year-ago quarter’s level of $845 million.

Pratt & Whitney: This segment’s sales totaled $6,439 million, up 14% from the year-ago quarter’s level. The improvement was due to growth in the commercial aftermarket and commercial OEM businesses, as well as a favorable mix. Increased military sales driven by higher sustainment volume also contributed to this unit’s sales growth.

Adjusted operating profit amounted to $405 million compared with the year-ago quarter’s level of $321 million.

Raytheon: This segment recorded fourth-quarter sales of $6,886 million, up 3% year over year, driven by higher sales volume from advanced technology and air power programs.       

The adjusted operating profit amounted to $618 million, up 8% from $570 million recorded in the corresponding period of 2022.

Financial Update

RTX had cash and cash equivalents of $6,587 million as of Dec 31, 2023, compared with $6,220 million as of Dec 31, 2022.

Long-term debt totaled $42,355 million as of Dec 31, 2023, up from $30,694 million as of Dec 31, 2022.

Net cash flow from operating activities was $7,883 million as of Dec 31, 2023, compared with $7,168 million at the end of fourth-quarter 2022.

Free cash flow totaled $3,906 million at the end of 2023 compared with $3,773 million at the end of 2022.

Guidance

RTX provided its financial guidance for 2024.

The company currently projects adjusted EPS in the band of $5.25-$5.40. The Zacks Consensus Estimate for RTX’s 2023 EPS is pegged at $5.40, in line with the higher end of the company’s guided range.

RTX expects to generate sales of $78-$79 billion in 2024. The Zacks Consensus Estimate for sales is pegged at $79.32 billion, which lies above the company’s guidance.

The company now expects free cash flow of $5.7 billion for 2024.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, RTX has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, RTX has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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