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Raytheon Technologies (RTX) Gains But Lags Market: What You Should Know

Zacks Equity Research

Raytheon Technologies (RTX) closed at $67.82 in the latest trading session, marking a +1.15% move from the prior day. This move lagged the S&P 500's daily gain of 1.9%. Elsewhere, the Dow gained 2.05%, while the tech-heavy Nasdaq added 1.75%.

Investors will be hoping for strength from RTX as it approaches its next earnings release. On that day, RTX is projected to report earnings of $0.30 per share, which would represent a year-over-year decline of 86.36%. Meanwhile, our latest consensus estimate is calling for revenue of $15.73 billion, down 19.87% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.44 per share and revenue of $67 billion, which would represent changes of -58.35% and -13.04%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for RTX. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 2.02% lower within the past month. RTX is currently a Zacks Rank #4 (Sell).

Valuation is also important, so investors should note that RTX has a Forward P/E ratio of 19.48 right now. For comparison, its industry has an average Forward P/E of 24.93, which means RTX is trading at a discount to the group.

Meanwhile, RTX's PEG ratio is currently 1.62. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. RTX's industry had an average PEG ratio of 6.5 as of yesterday's close.

The Aerospace - Defense Equipment industry is part of the Aerospace sector. This industry currently has a Zacks Industry Rank of 168, which puts it in the bottom 34% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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