GE Aerospace's (GE -0.71%) joint venture, CFM International, and RTX's (RTX -0.06%) Pratt & Whitney produce rival engines in the Airbus A320neo. In addition, the CFM engine, LEAP, is the sole engine option on the Boeing 737 MAX.
RTX (RTX) reported earnings 30 days ago. What's next for the stock?
Kevin Simpson, Capital Wealth Planning founder and CIO, joins CNBC's "Halftime Report" to detail his latest portfolio moves.
Recently, Zacks.com users have been paying close attention to RTX (RTX). This makes it worthwhile to examine what the stock has in store.
RTX leverages decades of missile and radar expertise to lead U.S. hypersonic innovation, advancing both offensive and defensive capabilities.
RTX secures a DARPA cybersecurity contract and posts strong defense and aerospace gains, but supply-chain and valuation risks linger.
RTX has enjoyed a well-diversified dual-pronged growth prospect arising from the ongoing commercial travel boom and the higher defense spending trends. These tailwinds have been observed in the higher multi-year backlog, the raised FY2025 organic growth guidance, and the richer adj operating margins, despite the tariff risks. These reasons may also be why RTX has been consistently well supported in its upward momentum, as FOMO traders/ investors continue to feed the its ongoing rally post earnings.
RTX issued weaker full-year EPS guidance, citing tariff impacts and tax law changes, despite a strong Q2 and a surge in commercial backlog. The company reported a flat defense sector backlog at $92 million, and organic sales growth is expected to slow, with no clear path to accelerated future growth. The stock's valuation has become stretched, trading at over 26x 2026 EPS estimates, while capital returns are now limited by high debt and valuation concerns.
RTX's record $236B backlog and global defense demand drive long-term growth, supported by major projects like the Golden Dome and commercial aerospace recovery. Short-to-medium-term risks include significant cash drain from the Pratt & Whitney powdered metal crisis and a $500M tariff headwind, pressuring margins and EPS guidance. Premium valuation and negative free cash flow growth expose the company to downside risk if operational or cash flow surprises occur; the stock is highly sensitive to sentiment.
RTX's Q2 results reaffirm its global leadership, record $236B backlog, and robust performance across all business segments, justifying an upgrade to 'buy'. Despite high valuation multiples and market expectations of perfection, RTX's quality, growth, and revenue visibility support a long-term core portfolio position. Risks include valuation compression and operational challenges, but RTX's resilience and adaptability underpin its appeal for disciplined, patient investors.
Recently, Zacks.com users have been paying close attention to RTX (RTX). This makes it worthwhile to examine what the stock has in store.
Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sell-side) analysts often affect a stock's price, do they really matter?