Why Is Aerospace And Defense Giant RTX Stock Rallying Today?

RTX Corporation RTX reported fourth-quarter fiscal 2023 results, adjusted net sales increased by 10% year-over-year to $19.82 billion, beating the consensus of $19.7 billion. 

RTX clocked a GAAP sales increase of 10% year-over-year to $19.93 billion. Adjusted EPS improved 2% Y/Y to $1.29, beating the consensus of $1.25.

At the end of the quarter, the backlog was $196 billion, of which $118 billion was from commercial aerospace and $78 billion was from defense.

Collins Aerospace’s sales were $7.12 billion (+14% Y/Y), driven by a 23% increase in commercial aftermarket and a 17% increase in commercial OE. The adjusted operating margin expanded by 120 bps to 14.8%.

Pratt & Whitney’s sales were $6.44 billion (+14% Y/Y), driven by a 20% increase in commercial OE and 18% increase in the commercial aftermarket. Adjusted operating margin of 6.3%, up by 60 bps.

Raytheon’s sales increased by 3% Y/Y to $6.89 billion, driven by higher volume on advanced technology and air power programs. The adjusted operating margin expanded by 40 bps to 9%.

During the quarter, the company repurchased $10.3 billion of RTX shares.

RTX’s operating cash flow from continuing operations for the quarter totaled $4.71 billion, compared to $4.63 billion a year ago. Free cash flow stood at $3.9 billion. 

Outlook for fiscal 2024: RTX expects sales of $78 billion-$79 billion, versus the consensus of $79.21 billion; sees adjusted EPS of $5.25 – $5.40 versus the consensus of $5.26. The company expects a free cash flow of ~$5.7 billion.

RTX provided 2025 financial commitments, updating 2020 to 2025 adjusted annual sales growth to 5.5%-6.0%, down from 6.0%-7.0%. The company now sees 2020 to 2025 adjusted segment margin expansion to be 500-550 basis points, down from 550-650 basis points.

“RTX is beginning 2024 with strong momentum and we are projecting another year of strong sales growth and continued segment margin expansion,” commented RTX President and COO Chris Calio. 

“The financial and operational outlook of our GTF fleet management plans remain consistent from October and continues to be a top priority as we focus on driving performance across all three businesses to support our customers and deliver shareowner value,” added Calio.

Price Action: RTX shares are trading higher by 5.86% at $90.00 on the last check Tuesday.