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Will Rising Commercial Air Traffic Aid RTX in Q2 Earnings?
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RTX Corp. (RTX - Free Report) is set to release second-quarter 2024 results on Jul 25, before market open.
The company delivered an average earnings surprise of 6.86% in the last four quarters. Improving commercial air traffic and a solid development volume for the F135 core upgrade program are likely to benefit RTX’s quarterly results amid high-interest expenses.
Growing Commercial Sales: A Key Growth Catalyst
Steadily increasing domestic and international commercial air traffic, resulting in increased flight hours, has been significantly boosting aftermarket demand for both wide-body and narrow-body aircraft in recent times. This, in turn, must have bolstered RTX’s commercial aftermarket sales across each of its aftermarket sales channels in the second 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 from Pratt & Whitney. In particular, high sales volume for large commercial engines, primarily related to GTF engine’s overhaul activity, is expected to have contributed favorably to RTX’s commercial original equipment manufacturer (OEM) sales.
Such impressive sales growth expectations from commercial OEM and aftermarket businesses might have cumulatively boosted the top-line projections for both Pratt & Whitney and Collins Aerospace segments.
The Zacks Consensus Estimate for Pratt & Whitney’s second-quarter adjusted revenues is pegged at $6,417.8 million, indicating an improvement of 12.6% from the year-ago quarter’s reported figure. The consensus mark for Collins Aerospace’s adjusted revenues is pinned at $6,885.4 million, indicating a 17.7% 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 high sustainment volume for the F-135, F-117 and F-100 programs, as well as development volume from the F-135 engine core upgrade program, can be expected to have bolstered RTX’s revenues from its military business during the second 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 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 consistent cost reduction initiatives, are expected to have bolstered RTX’s earnings. Also, gains from sale of its Cybersecurity, Intelligence and Services division are likely to have added an impetus to RTX’s overall bottom-line growth.
However, persistently high-interest expenses might have affected the bottom-line performance to some extent.
Moreover, during the first quarter, RTX recorded a charge of $175 million related to the recognition of unfavorable purchase commitments. This charge was a result of the Canadian government’s imposition of sanctions, which included U.S. and German-based Russian-owned entities from which RTX sources titanium for use in its Canadian operations. In relation to this matter, RTX might have incurred a similar charge, thereby adversely impacting its earnings growth.
Q2 Expectations
The Zacks Consensus Estimate for second-quarter earnings is pegged at $1.29 per share on revenues of $19.31 billion. While the bottom-line estimate remains flat year over year, the top-line estimate implies an improvement of 5.4%.
What Our Model Predicts
Our proven model does not conclusively predict 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. This is not the case here.
Currently, RTX has an Earnings ESP of -1.86% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Below, we have mentioned a few promising players from the same industry that have the right combination of elements to beat on earnings this reporting cycle.
The Zacks Consensus Estimate for earnings is pegged at $3.30 per share, indicating an improvement of 22.2% from the prior-year quarter’s reported actuals. The Zacks Consensus Estimate for sales is pegged at $11.52 billion, which implies a 13.5% increase from the top line reported in the prior-year quarter.
Northrop Grumman (NOC - Free Report) is slated to report second-quarter 2024 results on Jul 25, before market open. It has an Earnings ESP of +1.09% and a Zacks Rank of 3 at present.
The Zacks Consensus Estimate for earnings is pinned at $5.95 per share, which suggests an 11.4% improvement from the second-quarter 2023 reported figure. The Zacks Consensus Estimate for sales is pegged at $10.07 billion, which implies a 5.2% increase from the top line reported in the prior-year quarter.
Huntington Ingalls Industries (HII - Free Report) is expected to report second-quarter 2024 results on Aug 1, before market open. It has an Earnings ESP of +0.39% and a Zacks Rank of 2 at present.
The Zacks Consensus Estimate for earnings is pegged at $3.59 per share, which suggests a 9.8% improvement from the second-quarter 2023 reported figure. The Zacks Consensus Estimate for sales is pegged at $2.84 billion, which implies a 1.9% increase from the top line reported in the prior-year quarter.
Image: Bigstock
Will Rising Commercial Air Traffic Aid RTX in Q2 Earnings?
RTX Corp. (RTX - Free Report) is set to release second-quarter 2024 results on Jul 25, before market open.
The company delivered an average earnings surprise of 6.86% in the last four quarters. Improving commercial air traffic and a solid development volume for the F135 core upgrade program are likely to benefit RTX’s quarterly results amid high-interest expenses.
Growing Commercial Sales: A Key Growth Catalyst
Steadily increasing domestic and international commercial air traffic, resulting in increased flight hours, has been significantly boosting aftermarket demand for both wide-body and narrow-body aircraft in recent times. This, in turn, must have bolstered RTX’s commercial aftermarket sales across each of its aftermarket sales channels in the second 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 from Pratt & Whitney. In particular, high sales volume for large commercial engines, primarily related to GTF engine’s overhaul activity, is expected to have contributed favorably to RTX’s commercial original equipment manufacturer (OEM) sales.
Such impressive sales growth expectations from commercial OEM and aftermarket businesses might have cumulatively boosted the top-line projections for both Pratt & Whitney and Collins Aerospace segments.
The Zacks Consensus Estimate for Pratt & Whitney’s second-quarter adjusted revenues is pegged at $6,417.8 million, indicating an improvement of 12.6% from the year-ago quarter’s reported figure. The consensus mark for Collins Aerospace’s adjusted revenues is pinned at $6,885.4 million, indicating a 17.7% 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 high sustainment volume for the F-135, F-117 and F-100 programs, as well as development volume from the F-135 engine core upgrade program, can be expected to have bolstered RTX’s revenues from its military business during the second 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 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 consistent cost reduction initiatives, are expected to have bolstered RTX’s earnings. Also, gains from sale of its Cybersecurity, Intelligence and Services division are likely to have added an impetus to RTX’s overall bottom-line growth.
However, persistently high-interest expenses might have affected the bottom-line performance to some extent.
Moreover, during the first quarter, RTX recorded a charge of $175 million related to the recognition of unfavorable purchase commitments. This charge was a result of the Canadian government’s imposition of sanctions, which included U.S. and German-based Russian-owned entities from which RTX sources titanium for use in its Canadian operations. In relation to this matter, RTX might have incurred a similar charge, thereby adversely impacting its earnings growth.
Q2 Expectations
The Zacks Consensus Estimate for second-quarter earnings is pegged at $1.29 per share on revenues of $19.31 billion. While the bottom-line estimate remains flat year over year, the top-line estimate implies an improvement of 5.4%.
What Our Model Predicts
Our proven model does not conclusively predict 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. This is not the case here.
Currently, RTX has an Earnings ESP of -1.86% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Below, we have mentioned a few promising players from the same industry that have the right combination of elements to beat on earnings this reporting cycle.
General Dynamics (GD - Free Report) is set to report second-quarter earnings on Jul 24, before market open. It has an Earnings ESP of +0.08% and a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for earnings is pegged at $3.30 per share, indicating an improvement of 22.2% from the prior-year quarter’s reported actuals. The Zacks Consensus Estimate for sales is pegged at $11.52 billion, which implies a 13.5% increase from the top line reported in the prior-year quarter.
Northrop Grumman (NOC - Free Report) is slated to report second-quarter 2024 results on Jul 25, before market open. It has an Earnings ESP of +1.09% and a Zacks Rank of 3 at present.
The Zacks Consensus Estimate for earnings is pinned at $5.95 per share, which suggests an 11.4% improvement from the second-quarter 2023 reported figure. The Zacks Consensus Estimate for sales is pegged at $10.07 billion, which implies a 5.2% increase from the top line reported in the prior-year quarter.
Huntington Ingalls Industries (HII - Free Report) is expected to report second-quarter 2024 results on Aug 1, before market open. It has an Earnings ESP of +0.39% and a Zacks Rank of 2 at present.
The Zacks Consensus Estimate for earnings is pegged at $3.59 per share, which suggests a 9.8% improvement from the second-quarter 2023 reported figure. The Zacks Consensus Estimate for sales is pegged at $2.84 billion, which implies a 1.9% increase from the top line reported in the prior-year quarter.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.