RTX Corporation Earning Analysis
Chart done on daily timeframe. RTX (previously know as Raytheon) reported quarterly earnings this morning and their numbers did not disappoint. As expected, the company is seeing strong demand as military contracts heat up, pushing their Q1 profits to $1.71B, reflecting growth from the $1.43B reported same quarter last year. Apart from profit growth, the company’s biggest highlight was their reported backlog. RTX ended the quarter with $202B in backlog, which means this year will be a busy year for them. The unfortunate wars in Ukraine and the Middle East are creating demand for RTX’s advanced products, and the numbers are a clear reflection of that.
The stock’s reaction to their earnings was flat, but that could be because earnings were already priced in. The stock is up more than 50% since their October lows, bringing their price to earnings ratio to about 45x, more expensive than direct competitors like Lockheed Martin which has a P/E of only 17. RTX will need to continue boosting their profits to justify the expensive ratio or else the stock will eventually correct itself.
For now, as long as geopolitical tensions are on the rise and as long as demand for defense is present, RTX will likely continue its way up. We’re looking for a move towards 108.85 next for a breakout into all time highs, but keep in mind that eventually this will need to come down towards 65.00-70.00 on a correction.