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RTX Shares Gain Steam On Record Backlog and Raised Guidance Amid Geopolitical Tensions

Wallstreet InsightTuesday, Oct 22, 2024 8:12 am ET

1min read

RTX shares continue to gain momentum as the company reported better-than-expected earnings and raised its guidance for the full year, boosted by a record backlog of $221 billion. The stock rose more than 2% in premarket trading.

Highlights:

Adjusted Sales: $20.1 billion, up 6% year-over-year, beating the $19.84 billion consensus.

Net Income: $1.47 billion, or $1.09 per share, compared with net loss 984 million, or -68 cents per share, in the same quarter last year. Excluding one-time items, adjusted earnings were $1.45 per share, easily beating the expected $1.34 per share, translating to a 16% year-over-year increase.

RTX delivered another strong quarter of organic sales growth, adjusted segment margin expansion, and free cash flow, said RTX President and CEO Chris Calio. Demand across our portfolio, particularly within commercial aftermarket and defense, remains robust and gives us the confidence to again raise our full year outlook for adjusted sales and adjusted EPS.

The aerospace and defense company raised its adjusted sales guidance to between $79.25 billion and $79.75 billion for the full year, up from the prior guidance of $78.75 billion to $79.5 billion. It now expects adjusted earnings of $5.50 to $5.58 per share, up from previous guidance of up to $5.45 per share.

Segment Results:

Collins Aerospace: Reported sales of $7,075 million, up 7% year-over-year. The increase in sales was driven by a 14% increase in defense and a 9% increase in commercial aftermarket, partially offset by an 8% decrease in commercial OE. Operating profit increased by 5% to $1.096 billion.

Pratt & Whitney: Reported sales of $7,239 million, up 14% year-over-year, driven by a 13% increase in commercial aftermarket, a 20% increase in military, and a 9% increase in commercial OE. Adjusted operating profits surged 45% to $597 million.

Raytheon: Reported sales of $6,386 million, down 1% year-over-year due to the divestiture of the Cybersecurity, Intelligence, and Services business and lower volume on air and space defense systems. However, operating profits saw a 16% increase to $661 million.

Overall, RTX continues to benefit from escalating geopolitical tensions in the Middle East, the Russia-Ukraine conflict, and increasing demand for its defense and aerospace products. The company's backlog continues to grow, contributing to its strong performance. The stock has already jumped 52% year-to-date.

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