RTX (RTX) Up 5.2% Since Last Earnings Report: Can This Continue?

It’s been a month since the last RTX (RTX) earnings report. Shares have risen about 5.2% in that time, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is RTX headed for a decline? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to get a better handle on the key drivers.

RTX Q1 Earnings Beat Estimates by 9%, YoY Sales Up

RTX Corporation’s first-quarter 2024 adjusted earnings per share (EPS) were $1.34, an 8.9% beat of the Zacks Consensus Estimate of $1.23. The bottom line also improved by 9.8% compared to $1.22 in the same quarter last year.

Including one-time items, the company reported GAAP earnings of $1.28 per share, compared with 97 cents in the year-ago quarter.

Operational efficiency

RTX’s total first-quarter net sales were $19,305 million, which topped the Zacks Consensus Estimate of $18,412.6 million by 4.8%. Earnings also improved by 12% from the $17,214 million reported in Q1 2023.

Total costs and expenses increased 14% year over year to $17,807 million. The company generated operating profit of $1,870 million compared to $1,687 million in the year-ago quarter.

RTX reported adjusted operating income of $2,292 million, an increase of 6.5% compared to the prior-year quarter’s figure of $2,153 million.

Segment efficiency

Collins Aerospace: Sales in this segment amounted to USD 6,673 million, up 9% year over year. This improvement can be attributed to higher aftermarket and commercial OEM sales, supported by strong demand in the commercial aerospace end markets. Increased sales of defense equipment resulting from higher volume also had a positive impact on the unit’s sales.

Adjusted segment operating profit was $1,048 million compared to $903 million in the prior-year quarter.

Pratt and Whitney: Total sales for this segment were $6,456 million, up 23% from the prior-quarter level. The improvement was driven by growth in aftermarket and commercial OEM business, driven by higher OE GTF volumes and favorable product mix, and higher aftermarket volumes. Increased sales of military equipment, resulting from higher service volumes on multiple platforms, also contributed to the unit’s sales growth.

Adjusted operating profit was $430 million, compared to $434 million in the year-ago quarter.

Raytheon: The segment reported first-quarter sales of $6,659 million, up 6% year-over-year, driven by higher sales volume of land and air defense systems, including Global Patriot, air defense systems and NASAMS, as well as advanced programs technology.

The story continues

The segment’s adjusted operating profit was $630 million, an increase of 8% compared to $584 million recorded in the same period of 2023.

Financial update

As of March 31, 2024, RTX had cash and cash equivalents of $5,607 million compared to $6,587 million as of December 31, 2023.

Long-term debt was $42,334 million as of March 31, 2024, compared to $42,355 million as of December 31, 2023.

Net cash flow from operations at March 31, 2024 was $342 million compared to cash outflow from operations of $863 million at the end of the first quarter of 2023.

Free cash outflow at the end of the first quarter of 2024 was $125 million compared to $1,383 million at the end of the first quarter of 2023.

Conductivity

RTX maintained its 2024 financial guidance.

The company continues to forecast adjusted EPS in the range of $5.25 to $5.40. The Zacks Consensus Estimate estimates RTX’s 2024 EPS at $5.39, which is above the company’s mid-range suggested range.

RTX still expects to generate sales in the range of $78-79 billion in 2024. The Zacks Consensus Estimate for sales is $78.63 billion, above half of the company’s projections.

The company still expects free cash flow of $5.7 billion in 2024.

How have estimates changed since then?

Over the last month, investors have seen a downward trend in estimate revisions.

VGM results

Right now, RTX has a weak D Growth Score, which is a rating with the same momentum score. Plotting a somewhat similar path, the stock received a grade of C on the value side, ranking in the middle 20% for this investment strategy.

Overall, the stock has a Total VGM Score of C. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company generally show a downward trend, and the scale of these corrections looks promising. Notably, RTX carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

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