RTX Corp stock, formerly known as Raytheon Technologies, has seen a rise of 9% in a week, outperforming its peer General Electric stock, which has only seen a 3% increase. This rise in RTX stock can be attributed to the company’s strong Q2 results and an upward revision to its full-year outlook. The company reported revenue of $19.7 billion and adjusted earnings of $1.41 per share, beating consensus estimates of $19.3 billion and $1.29, respectively. This article will discuss RTX’s recent stock performance, key takeaways from its Q2 results, and its current valuation.
Despite a strong 65% increase in RTX stock from early January to now, the stock’s performance has been inconsistent, with returns of 23% in 2021, 19% in 2022, and -17% in 2023. In comparison, the S&P 500 saw returns of 27% in 2021, -19% in 2022, and 24% in 2023. It has been challenging for individual stocks, including heavyweights in the Industrials sector like GE, CAT, and UNP, to consistently beat the S&P 500. However, the Trefis High Quality Portfolio, which consists of 30 stocks, has outperformed the benchmark each year over the same period, providing better returns with less risk.
Looking ahead, RTX faces an uncertain macroeconomic environment with high oil prices and elevated interest rates. The company’s stock currently trades at 21x its expected earnings in 2024, higher than its average P/E ratio of 18x over the last three years. In Q2’24, RTX reported revenue of $19.7 billion, up 8% year-over-year, driven by higher demand for commercial aftermarket for Collins Aerospace and Pratt & Whitney. Despite a revenue decline in the Raytheon segment due to divestiture earlier this year, RTX saw a 100 bps improvement in operating profit margin to 11.7% in Q2.
RTX raised its sales outlook to $78.75 – $79.5 billion and adjusted earnings per share guidance to $5.35 – $5.45, compared to its earlier guidance. The upbeat Q2 results and upward revision in outlook pleased investors, but with the stock trading at a valuation multiple higher than its historical average, investors may be better off waiting for a dip to invest in RTX. While RTX stock may have limited room for growth, it is essential to compare the company’s metrics with its peers to gain a broader perspective on its performance in the industry. Investors can find valuable comparisons for companies across industries at Peer Comparisons.
Overall, RTX Corp stock has seen a significant increase in recent days, driven by strong Q2 results and an upward revision to its full-year outlook. However, the stock’s performance has been inconsistent in recent years compared to the S&P 500. While RTX faces challenges in an uncertain macroeconomic environment, its improved sales outlook and earnings guidance have been well-received by investors. With the stock trading at a higher valuation multiple than its historical average, investors may want to wait for a potential dip before considering an investment in RTX.
