Raytheon rallies 6% in reaction to Q4 earnings and FY24, Long-term outlooks
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Raytheon (RTX), a leading defense and aerospace company, reported strong earnings for the fourth quarter of 2023, with a net income of $1.43 billion, or $1.05 per share, recording a slight increase from the previous year's quarter. The adjusted profit of $1.29 per share surpassed analyst consensus estimates by five cents. The company's revenue experienced a 10% growth to $19.93 billion, outpacing the estimated $19.74 billion.
Raytheon's earnings report highlighted the impressive 25% increase in the Pratt & Whitney jet engine unit's profit, reaching $382 million. This growth was accompanied by a 14% increase in sales, bringing the unit to $6.44 billion. The unit recovered from an earlier engine issue, and the growth was primarily driven by higher volume in advanced technology and air power sectors.
Greg Hayes, RTX Chairman and CEO, expressed satisfaction with the company's results, stating that they delivered 11% organic sales growth and $5.5 billion in free cash flow for the year, surpassing expectations. The company supported the continued recovery in commercial aerospace and provided essential platforms and advanced technologies to its customers, achieving $95 billion in new awards and ending the year with a record backlog of $196 billion.
Looking ahead, Raytheon provided guidance for the fiscal year 2024 (FY24). It expects adjusted earnings per share (EPS) of $5.25 to $5.40, excluding non-recurring items, compared to the consensus estimates of $5.28. Raytheon also forecasted FY24 revenue to be between $78 billion to $79 billion, against the $79.33 billion Street expectations.
In its financial commitments for 2025, Raytheon updated its 2020 to 2025 adjusted annual sales growth from 6.0% to 7.0% to 5.5% to 6.0%, and the adjusted segment margin expansion from 550 to 650 basis points to 500 to 550 basis points. The company reaffirmed its 2025 free cash flow commitment of $7.5 billion and its capital return commitment of $36 to $37 billion through 2025.
The technical chart for Raytheon Technologies (RTX) presents a bullish trend, characterized sustained buying interest and an upward price trajectory. The stock's price is positioned above both the short-term and long-term moving averages, a classic bullish signal suggesting positive momentum. Additionally, the price is approaching the upper Bollinger Band, which often points to strength in the trend, while the Relative Strength Index (RSI) sits above 50 but below the overbought level, indicating room for potential growth without immediate overvaluation concerns. The accompanying increase in trading volume on days with positive price action further reinforces the bullish outlook depicted in the chart.
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