Stock of the Day

September 25, 2023

RTX (RTX)

$138.99
+$0.44 (+0.3%)
Market Cap: $185.68B

About RTX

RTX Corporation, an aerospace and defense company, provides systems and services for the commercial, military, and government customers in the United States and internationally. It operates through three segments: Collins Aerospace, Pratt & Whitney, and Raytheon. The Collins Aerospace Systems segment offers aerospace and defense products, and aftermarket service solutions for civil and military aircraft manufacturers and commercial airlines, as well as regional, business, and general aviation, defense, and commercial space operations. This segment also designs, produces, and supports cabin interior, including oxygen systems, food and beverage preparation, storage and galley systems, and lavatory and wastewater management systems; battlespace, test and training range systems, crew escape systems, and simulation and training solutions; information management services; and aftermarket services that include spare parts, overhaul and repair, engineering and technical support, training and fleet management solutions, and asset and information management services. Its Pratt & Whitney segment supplies aircraft engines for commercial, military, business jet, and general aviation customers; and produces, sells, and services military and commercial auxiliary power units. The Raytheon segment provides defensive and offensive threat detection, tracking, and mitigation capabilities for U.S., foreign government, and commercial customers. The company was formerly known as Raytheon Technologies Corporation and changed its name to RTX Corporation in July 2023. RTX Corporation was incorporated in 1934 and is headquartered in Arlington, Virginia.

RTX Bull Case

Here are some ways that investors could benefit from investing in RTX Co.:

  • RTX Co. recently reported earnings per share of $1.47, surpassing analysts' expectations, indicating strong financial performance and potential for growth.
  • The company has declared an increased quarterly dividend of $0.68 per share, reflecting a commitment to returning value to shareholders and a positive trend in cash flow.
  • The current stock price is around $139, showing a recent upward movement, which may attract investors looking for growth opportunities.
  • RTX Co. operates in the aerospace and defense sectors, which are often resilient during economic downturns, providing a level of stability for investors.
  • Analysts predict a solid earnings growth with an expected EPS of 6.11 for the current year, suggesting continued profitability and potential for stock appreciation.

RTX Bear Case

Investors should be bearish about investing in RTX Co. for these reasons:

  • Despite strong earnings, the company's net margin is relatively modest at 5.91%, which may raise concerns about profitability compared to industry peers.
  • RTX Co. has a dividend payout ratio of 79.77%, indicating that a significant portion of earnings is being distributed as dividends, which could limit reinvestment in growth opportunities.
  • Recent insider selling, including a vice president reducing their stake, may signal a lack of confidence in the company's short-term prospects.
  • The stock has a debt-to-equity ratio of 0.63, which, while manageable, suggests that the company is using a moderate amount of debt to finance its operations, potentially increasing financial risk.
  • Market volatility in the aerospace and defense sectors can impact stock performance, making it a riskier investment during uncertain economic times.
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