Is RTX Stock (RTX) a Buy Ahead of Q2 Earnings?
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What Wall Street Expects
Wall Street is expecting RTX to report quarterly earnings of $1.45 per share, which would be an increase of 2.8% compared to the same period last year. Revenues are forecasted to be $20.66 billion, marking a year-over-year increase of 4.8%.
Will RTX be able to beat these estimates? As can be seen below, it has a very good track record in doing just that.
Key Insights Ahead of Earnings
RTX reported a 5% increase in Q1 sales to $20.3 billion and a 10% rise in adjusted earnings per share. A ramp-up in defense spending following the Russian invasion of Ukraine has been a big driver for its Collins Aerospace and Raytheon divisions.
Governments around the world, such as European members of NATO, have laid out plans to increase investment following pressure from President Trump. The U.S. is also allocating record budgets to areas such as combat systems, cyber resilience and advanced propulsion technologies.
Recently, the company was awarded a $74 million contract to produce RAM Guided Missile Launching Systems for the U.S. Navy.
The company's commercial aerospace arm, including Pratt & Whitney engines, has also seen higher sales. That's down to demand from more travelers returning to the skies post-pandemic, a need to replace older aircraft and generally have a fleet with fuel-efficient and sustainable technologies. That fits well with RTX innovations such as hybrid-electric engines.
Morgan Stanley recently raised the firm's price target to $165 from $135 and kept an Overweight rating. It expects industry dynamics in aerospace to remain on trend favoring stocks with a mix of aftermarket and original equipment exposure.
Is RTX a Good Stock to Buy Now?
On TipRanks, RTX has a Moderate Buy consensus based on 12 Buy and 6 Hold ratings. Its highest price target is $182.
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But one way it could work, at least in theory, is that a certain percentage of the top American recruits in the key Olympic pipeline sports would go into a recruiting pool. When they choose a school, this government-funded organization would pay for the four-year scholarship, attach an NIL payment for the athlete to represent the organization and provide a grant to the school as reimbursement for the development cost. To make it more equitable, schools would be limited to a certain number of recruits every year from that elite pool of athletes. The rest of the roster would be filled with either foreign athletes or non-elite American recruits that they must pay for themselves. One obvious criticism of this plan is that smaller schools would get squeezed out even further, given that they're more likely to have a budget crisis than a Texas or an Ohio State and less likely to recruit elite athletes. This might require the NCAA to rethink how it stratifies schools into three divisions and instead move toward a two-tiered model where you either meet certain scholarship and funding standards to be in the Olympic development division or compete in the non-Olympic division, which would functionally be more like intramural or club sports. And maybe none of this is workable. But the point is, it's time to come up with some creative, bold solutions rather than just whining about how schools can't afford to pay for their non-revenue sports anymore. For many, many years, the USOPC has gotten a free ride on the back of the NCAA system, which has only been possible because universities illegally colluded not to share revenues with the athletes that played a significant role in generating them. But the good news is, all the systems are in place to keep Team USA's supremacy intact. 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