Raytheon Technologies (RTX) AI Stock Analysis

• Market Cap: $156.81B
• Dividend Yield: 2.15%
• Average Volume (3M): 5.39M
• Price to Earnings (P/E): 33.1
• Beta (1Y): 0.49
• Revenue Growth: 17.15%
• EPS Growth: 58.66%
• Country: US
• Employees: 186,000
• Sector: Industrials
• Sector Strength: 63
• Industry: Aerospace & Defense
• EPS (TTM): 3.55
• Shares Outstanding: 1,335,090,000
• 10 Day Avg. Volume: 4,862,775
• 30 Day Avg. Volume: 5,387,856
• PEG Ratio: 0.56
• Price to Book (P/B): N/A
• Price to Sales (P/S): 2.18
• Price to Cash Flow (P/CF): 28.20
• P/FCF Ratio: 23.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $145.81
• Price Target Upside: 24.15% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 16

RTX demonstrates strong financial performance with solid revenue growth and profitability. Technical analysis supports a positive trend, though valuation remains a concern given the high P/E ratio. The earnings call highlights growth opportunities while acknowledging challenges. Overall, RTX is well-positioned in the Aerospace & Defense sector, but valuation and certain operational challenges suggest a cautious approach.

Positive Factors

Aftermarket Services

RTX's aftermarket services, particularly for Pratt & Whitney and Collins Aerospace components, command higher margins and generate consistent revenue streams, offering significant growth potential as the installed base continues to grow.

Defense Demand

Rising defence spending globally amid escalating geopolitical tensions could further bolster an already substantial and growing defence backlog, lifting the potential for positive earnings surprises.

Earnings

RTX adjusted EPS of $1.54 beat consensus of $1.39, leading to a raised target price to $136.

Negative Factors

Engine Issues

RTX should trade at a discount relative to other commercially focused aerospace and defence companies due to relatively sluggish earnings growth and potential event risk from greater-than-anticipated issues with the GTF engines.

Segmental Margins

Defence segmental margins could remain a drag, while there are still some lingering risks on the GTF engines.

Uncertainty in Guidance

RTX hasn't factored repurchases into the 2025 outlook, and leverage is close to its pre-ASR level, which introduces uncertainty.

Raytheon Technologies Business Overview & Revenue Model

Company Description

RTX Corporation, formerly known as Raytheon Technologies, is a prominent multinational aerospace and defense conglomerate. The company operates through three primary business segments: Collins Aerospace, Pratt & Whitney, and Raytheon Intelligence & Space. Collins Aerospace specializes in providing advanced systems for commercial and military aircraft, while Pratt & Whitney is renowned for its design and manufacture of aircraft engines. Raytheon Intelligence & Space focuses on developing innovative solutions in the fields of cybersecurity, intelligence, surveillance, and reconnaissance.

How the Company Makes Money

RTX Corporation generates revenue primarily through the sale of aerospace and defense products and services. Its key revenue streams include the production and servicing of aircraft engines through its Pratt & Whitney segment, and the development of avionics and communication systems within Collins Aerospace. Additionally, the Raytheon Intelligence & Space segment contributes significantly by providing defense electronics, air and missile defense systems, and cybersecurity solutions to both governmental and commercial clients. The company also benefits from long-term contracts and partnerships with the U.S. government and other international defense organizations, which provide a steady stream of income through both initial sales and ongoing service and maintenance agreements.

Raytheon Technologies Financial Statement Overview

Summary

RTX's financial statements show robust revenue growth and profitability, with efficient cost management. The balance sheet indicates moderate leverage and a strong equity base, though increased liabilities warrant attention. Cash flow generation is strong but should be monitored for liquidity stability. Overall, RTX is on solid financial footing with some areas to watch.

Income Statement

RTX has shown strong revenue growth from the previous year, with a 17.14% increase in revenue. The gross profit margin for TTM is 19.08%, indicating efficient cost management. The net profit margin improved to 6.01%, reflecting higher profitability. EBIT and EBITDA margins stand at 8.75% and 13.60% respectively, showing robust operational performance.

Balance Sheet

The debt-to-equity ratio is 0.67, showing moderate leverage that is manageable. Return on Equity (ROE) is 8.06%, indicating a respectable return on shareholder investments. The equity ratio is 36.94%, suggesting a solid equity base. However, the total liabilities have increased slightly, which could pose a risk if not managed well.

Cash Flow

Operating cash flow to net income ratio is 1.48, indicating strong cash flow relative to reported earnings. Free cash flow showed a decrease, with a growth rate of -13.36%, which might affect liquidity if the trend continues. The free cash flow to net income ratio is 0.84, suggesting adequate but potentially strained cash generation to cover profits.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
80.74B	68.92B	67.07B	64.39B	56.59B
	Gross Profit
15.41B	12.09B	13.67B	12.49B	8.53B
	EBIT
6.54B	3.56B	7.30B	6.90B	2.20B
	EBITDA
12.53B	9.61B	11.17B	10.56B	2.95B
	Net Income Common Stockholders
4.77B	3.19B	5.20B	3.86B	-2.93B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
5.58B	6.59B	6.22B	7.83B	8.80B
	Total Assets
162.86B	161.87B	158.86B	161.40B	162.15B
	Total Debt
40.54B	45.24B	33.50B	33.14B	33.34B
	Net Debt
34.96B	38.65B	27.28B	25.31B	24.54B
	Total Liabilities
100.90B	100.42B	84.65B	86.70B	88.27B
	Stockholders Equity
60.16B	59.80B	72.63B	73.07B	72.16B
Cash Flow		Free Cash Flow
4.53B	4.72B	4.39B	4.75B	1.64B
	Operating Cash Flow
7.16B	7.88B	7.17B	7.07B	3.61B
	Investing Cash Flow
-2.63B	-3.04B	-2.83B	-1.36B	3.10B
	Financing Cash Flow
-6.62B	-4.53B	-5.86B	-6.68B	-5.27B

Raytheon Technologies Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 117.45
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RTX, the sentiment is Negative. The current price of 117.45 is below the 20-day moving average (MA) of 131.33, below the 50-day MA of 128.86, and below the 200-day MA of 118.93, indicating a bearish trend. The MACD of 1.59 indicates Positive momentum. The RSI at 55.62 is Neutral, neither overbought nor oversold. The STOCH value of 25.34 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RTX.

Raytheon Technologies Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NOC	78 Outperform	$70.28B	17.13	27.75%	1.70%	4.44%	110.33%
RTX	77 Outperform	$156.81B	33.06	7.96%	2.15%	17.15%	58.66%
GD	75 Outperform	$67.10B	18.34	17.44%	2.27%	12.88%	13.78%
LMT	74 Outperform	$101.72B	19.37	81.04%	2.98%	5.14%	-19.14%
GE	70 Outperform	$179.04B	27.92	27.62%	0.89%	-32.60%	-28.55%
Sector *	62 Neutral	$7.25B	12.39	3.08%	3.39%	3.63%	-14.32%
BA	39 Underperform	$102.77B	―	-162.23%	―	-14.49%	-399.90%

Raytheon Technologies Corporate Events

RTX Announces Leadership Transition with New Chairman

On February 3, 2025, RTX Corporation announced that Gregory J. Hayes will step down as Executive Chairman and Board member on April 30, 2025, transitioning to a Special Advisor role to the CEO until January 2, 2026. Christopher T. Calio, currently President and CEO, will also assume the role of Chairman, effective April 30, 2025. Hayes, who has led RTX through significant industry changes, will continue with a base salary of $1,100,000 but will forgo annual incentives for 2025. This leadership change is expected to sustain RTX’s strategic priorities and growth trajectory, reinforcing its operations and stakeholder relations.