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Will Solid Sales Performance Bolster RTX in Q1 Earnings?
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RTX Corp. (RTX - Free Report) is set to release first-quarter 2024 results on Apr 23, before market open.
The company delivered an average earnings surprise of 7.10% in the last four quarters. Improving commercial air traffic and a solid sustainment volume for F135 are likely to benefit RTX’s quarterly results amid higher interest expenses.
Growing Commercial Sales: A Key Growth Catalyst
Steadily increasing commercial air traffic, which resulted in an increase in flight hours, has significantly boosted aftermarket demand for both wide-body and narrow-body aircraft in 2023. A similar growth trend is expected to have prevailed this year as well, which must have bolstered RTX’s commercial aftermarket sales across each of its aftermarket sales channels in the first quarter.
On the other hand, an increased demand for wide-body, narrow-body, and business jets, buoyed by improving commercial air passenger travel rates, is likely to have boosted deliveries of jet engines, particularly large commercial engines from Pratt & Whitney. This, is turn, can be expected to have contributed favorably toward the company’s commercial original equipment manufacturer (OEM) sales.
Such impressive expectations for commercial OEM and aftermarket sales growth, backed by ramp-up production rates adopted by major jet makers over the past few months (driven by favorable air travel dynamics), must have boosted the sales growth expectation for both Pratt & Whitney and Collins Aerospace business segments.
The Zacks Consensus Estimate for Pratt & Whitney’s first-quarter adjusted revenues is pegged at $5,935.5 million, indicating an improvement of 13.5% from the year-ago quarter’s reported figure. The consensus mark for Collins Aerospace’s adjusted revenues is pinned at $6,646.5 million, indicating a 19.1% increase from the prior-year quarter’s level.
Solid Outlook for Military Sales
Growing global defense budgets have led RTX to witness solid order growth in the recent past. This, along with higher F135 development and sustainment volume, can be expected to have bolstered RTX’s revenues from its military business during the soon-to-be-reported quarter.
Other Factors to Note
Strong sales performance from the majority of RTX’s businesses, as mentioned above, might have boosted the company’s overall first-quarter revenues.
Factors like solid sales expectations, profit from higher commercial aftermarket at Pratt & Whitney as well as Collins Aerospace, higher defense volume, along with the company’s cost reduction initiatives, are expected to have bolstered RTX’s first-quarter earnings. However, higher interest expense, principally from the debt RTX issued to fund the accelerated share repurchase last year, might have affected the bottom-line performance to some extent.
The transaction related to the divestment of RTX’s Cybersecurity, Intelligence and Services division for $1.3 billion is projected to have been completed in the first quarter. We may expect to get further updates on this sell-off once the quarterly results are out.
Q1 Expectations
The Zacks Consensus Estimate for RTX’s first-quarter earnings is pegged at $1.23 per share on revenues of $18.41 billion. While the bottom-line estimate indicates a rise of 0.8% from the year-ago quarter’s reported figure, the top-line estimate implies an improvement of 7%.
What Our Model Predicts
Our proven model predicts an earnings beat for RTX this time around. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to post an earnings beat, which is the case here.
Currently, RTX has an Earnings ESP of +1.76% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Below are three other defense stocks that too have the right combination of elements to post an earnings beat this time around.
Huntington Ingalls delivered a four-quarter average earnings surprise of 20.64%. The consensus estimate for first-quarter earnings is pegged at $3.49 per share, while that for sales is pinned at $2.80 billion.
L3Harris Technologies (LHX - Free Report) is scheduled to release first-quarter results on Apr 25. LHX has an Earnings ESP of +1.98% and a Zacks Rank #3 at present.
L3Harris delivered a four-quarter average earnings surprise of 1.53%. The Zacks Consensus Estimate for LHX’s first-quarter earnings is pegged at $2.88 per share, while that for sales is pinned at $5.09 billion.
Northrop Grumman (NOC - Free Report) is slated to report first-quarter results on Apr 25. NOC has an Earnings ESP of +1.65% and a Zacks Rank #3 at present.
NOC delivered a four-quarter average earnings surprise of 5.64%. The consensus mark for NOC’s first-quarter earnings is pegged at $5.83 per share, while that for sales is pinned at $9.77 billion.
Image: Bigstock
Will Solid Sales Performance Bolster RTX in Q1 Earnings?
RTX Corp. (RTX - Free Report) is set to release first-quarter 2024 results on Apr 23, before market open.
The company delivered an average earnings surprise of 7.10% in the last four quarters. Improving commercial air traffic and a solid sustainment volume for F135 are likely to benefit RTX’s quarterly results amid higher interest expenses.
Growing Commercial Sales: A Key Growth Catalyst
Steadily increasing commercial air traffic, which resulted in an increase in flight hours, has significantly boosted aftermarket demand for both wide-body and narrow-body aircraft in 2023. A similar growth trend is expected to have prevailed this year as well, which must have bolstered RTX’s commercial aftermarket sales across each of its aftermarket sales channels in the first quarter.
RTX Corporation Price and EPS Surprise
RTX Corporation price-eps-surprise | RTX Corporation Quote
On the other hand, an increased demand for wide-body, narrow-body, and business jets, buoyed by improving commercial air passenger travel rates, is likely to have boosted deliveries of jet engines, particularly large commercial engines from Pratt & Whitney. This, is turn, can be expected to have contributed favorably toward the company’s commercial original equipment manufacturer (OEM) sales.
Such impressive expectations for commercial OEM and aftermarket sales growth, backed by ramp-up production rates adopted by major jet makers over the past few months (driven by favorable air travel dynamics), must have boosted the sales growth expectation for both Pratt & Whitney and Collins Aerospace business segments.
The Zacks Consensus Estimate for Pratt & Whitney’s first-quarter adjusted revenues is pegged at $5,935.5 million, indicating an improvement of 13.5% from the year-ago quarter’s reported figure. The consensus mark for Collins Aerospace’s adjusted revenues is pinned at $6,646.5 million, indicating a 19.1% increase from the prior-year quarter’s level.
Solid Outlook for Military Sales
Growing global defense budgets have led RTX to witness solid order growth in the recent past. This, along with higher F135 development and sustainment volume, can be expected to have bolstered RTX’s revenues from its military business during the soon-to-be-reported quarter.
Other Factors to Note
Strong sales performance from the majority of RTX’s businesses, as mentioned above, might have boosted the company’s overall first-quarter revenues.
Factors like solid sales expectations, profit from higher commercial aftermarket at Pratt & Whitney as well as Collins Aerospace, higher defense volume, along with the company’s cost reduction initiatives, are expected to have bolstered RTX’s first-quarter earnings. However, higher interest expense, principally from the debt RTX issued to fund the accelerated share repurchase last year, might have affected the bottom-line performance to some extent.
The transaction related to the divestment of RTX’s Cybersecurity, Intelligence and Services division for $1.3 billion is projected to have been completed in the first quarter. We may expect to get further updates on this sell-off once the quarterly results are out.
Q1 Expectations
The Zacks Consensus Estimate for RTX’s first-quarter earnings is pegged at $1.23 per share on revenues of $18.41 billion. While the bottom-line estimate indicates a rise of 0.8% from the year-ago quarter’s reported figure, the top-line estimate implies an improvement of 7%.
What Our Model Predicts
Our proven model predicts an earnings beat for RTX this time around. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to post an earnings beat, which is the case here.
Currently, RTX has an Earnings ESP of +1.76% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Below are three other defense stocks that too have the right combination of elements to post an earnings beat this time around.
Huntington Ingalls Industries Inc (HII - Free Report) is slated to release first-quarter results on May 2. HII has an Earnings ESP of +1.39% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Huntington Ingalls delivered a four-quarter average earnings surprise of 20.64%. The consensus estimate for first-quarter earnings is pegged at $3.49 per share, while that for sales is pinned at $2.80 billion.
L3Harris Technologies (LHX - Free Report) is scheduled to release first-quarter results on Apr 25. LHX has an Earnings ESP of +1.98% and a Zacks Rank #3 at present.
L3Harris delivered a four-quarter average earnings surprise of 1.53%. The Zacks Consensus Estimate for LHX’s first-quarter earnings is pegged at $2.88 per share, while that for sales is pinned at $5.09 billion.
Northrop Grumman (NOC - Free Report) is slated to report first-quarter results on Apr 25. NOC has an Earnings ESP of +1.65% and a Zacks Rank #3 at present.
NOC delivered a four-quarter average earnings surprise of 5.64%. The consensus mark for NOC’s first-quarter earnings is pegged at $5.83 per share, while that for sales is pinned at $9.77 billion.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.