Raytheon Technologies (NYSE:RTX) - Share price, News & Analysis

Q: What is the Fair Price of RTX when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

RTX ($83.11) is trading below our estimate of [[fair value]] ($218.1)

RTX fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	2/6
Past Performance	4/6
Financial Health	5/6
Dividends	4/6

RTX Stock Overview

Raytheon Technologies Corporation, an aerospace and defense company, provides systems and services for the commercial, military, and government customers worldwide.

Rewards

Trading at 61.9% below our estimate of its fair value

Earnings are forecast to grow 16.43% per year

Earnings grew by 113% over the past year

Trading below our calculated fair Price-To-Earnings ratio

Analysts in good agreement that stock price will rise by 30.9%

Risk Analysis

Unstable dividend track record

Raytheon Technologies Competitors

Lockheed Martin

NYSE:LMT

US$106.0b

Northrop Grumman

NYSE:NOC

US$75.1b

General Dynamics

NYSE:GD

US$60.4b

L3Harris Technologies

NYSE:LHX

US$41.6b

Price History & Performance

Summary of all time highs, changes and price drops for Raytheon Technologies
Historical stock prices
Current Share Price	US$83.11
52 Week High	US$106.02
52 Week Low	US$79.00
Beta	0.74
1 Month Change	-5.12%
3 Month Change	-10.56%
1 Year Change	-5.22%
3 Year Change	-37.36%
5 Year Change	-29.94%
Change since IPO	1,097.98%

Recent News & Updates

Sep 28

Raytheon Technologies bags ~$278M modification contract for Naval Air Systems

Raytheon Technologies (NYSE:RTX) Pratt and Whitney Military Engines is awarded a not-to-exceed $277.92M modification (P00007) to a previously awarded cost-plus-incentive-fee, fixed-price-incentive-firm-target undefinitized contract (N0001920C0011). This modification adds scope for the production and delivery of F-35 spares, to include four Short Takeoff and Vertical Landing spare engines for the U.S. Marine Corps and 20 power modules for the U.S. Air Force. Work is expected to be completed in October 2025. The Naval Air Systems Command is the contracting activity.

Sep 21

Raytheon awarded $160.17M by U.S. Navy

Raytheon Co (NYSE:RTX) has been awarded awarded a $160.17M firm-fixed-price, cost-plus-fixed-fee, and cost-only contract for Dual Band Radar (DBR) design agent and technical engineering efforts. Engineering efforts and supplies are required to support the DBR systems installed aboard CVN-78 and DDG-1000 class ships. This contract includes options which, if exercised, would bring the cumulative value of the contract to $440.64M. If all options are exercised, work will continue through September 2027.

Sep 13

Raytheon cuts free cash flow guidance to reflect research, experimentation capitalization

Raytheon Technologies (NYSE:RTX) on Tuesday cut its free cash flow outlook to reflect the impact of legislation requiring capitalization of research and experimentation for tax purposes. RTX now expects its 2022 free cash flow to be ~$4B instead of ~$6B. The company also reaffirmed its 2022 sales and adj. EPS guidance.

Sep 01

Does Raytheon Technologies (NYSE:RTX) Have A Healthy Balance Sheet?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the...

Aug 30

Rockwell Collins, a Raytheon subsidiary nabs ~$177M contract for Air Force Life Cycle Management

Rockwell Collins, part of Raytheon (NYSE:RTX) has been awarded a $176.98M firm-fixed-price, ID/IQ contract for High Frequency Global Communications System (or HFGCS) – Scope Command Next Generation. This contract supports a ground radio equipment/network infrastructure and associated antenna subsystems in support of strategic military command and control communications. Work is expected to be completed by Aug. 30, 2028. This award is the result of a sole source acquisition. Air Force Life Cycle Management Center is the contracting activity (FA8102-22-D-0004). (Awarded on August 29, 2022)

Shareholder Returns

	RTX	US Aerospace & Defense	US Market
7D	2.5%	1.0%	1.0%
1Y	-5.2%	0.8%	-20.0%

Return vs Industry: RTX underperformed the US Aerospace & Defense industry which returned -2.6% over the past year.

Return vs Market: RTX exceeded the US Market which returned -23.2% over the past year.

Price Volatility

Is RTX's price volatile compared to industry and market?
RTX volatility
RTX Average Weekly Movement	3.7%
Aerospace & Defense Industry Average Movement	6.1%
Market Average Movement	6.8%
10% most volatile stocks in US Market	15.5%
10% least volatile stocks in US Market	2.8%

Stable Share Price: RTX is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: RTX's weekly volatility (4%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
n/a	174,000	Greg Hayes	https://www.rtx.com

Raytheon Technologies Corporation, an aerospace and defense company, provides systems and services for the commercial, military, and government customers worldwide. It operates through four segments: Collins Aerospace Systems, Pratt & Whitney, Raytheon Intelligence & Space, and Raytheon Missiles & Defense. The Collins Aerospace Systems segment offers aerospace and defense products, and aftermarket service solutions for aircraft manufacturers and airlines, as well as regional, business, and general aviation; and for defense and commercial space operations.

Raytheon Technologies Fundamentals Summary

How do Raytheon Technologies's earnings and revenue compare to its market cap?
RTX fundamental statistics
Market Cap	US$122.32b
Earnings (TTM)	US$4.49b
Revenue (TTM)	US$65.29b

27.2x

P/E Ratio

1.9x

P/S Ratio

Is RTX overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
RTX income statement (TTM)
Revenue	US$65.29b
Cost of Revenue	US$52.09b
Gross Profit	US$13.20b
Other Expenses	US$8.71b
Earnings	US$4.49b

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	3.05
Gross Margin	20.22%
Net Profit Margin	6.88%
Debt/Equity Ratio	43.6%

How did RTX perform over the long term?

See historical performance and comparison

Dividends

2.6%

Current Dividend Yield

69%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is RTX undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for RTX?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for RTX. This is calculated by dividing RTX's market cap by their current preferred multiple.
What is RTX's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$122.32b

RTX key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	2.3x
Enterprise Value/EBITDA	13.5x
PEG Ratio	1.7x

Price to Earnings Ratio vs Peers

How does RTX's PE Ratio compare to its peers?

RTX PE Ratio vs Peers

The above table shows the PE ratio for RTX vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	18.9x
LMT Lockheed Martin	22.5x	7.4%	US$106.0b
NOC Northrop Grumman	13.2x	5.1%	US$75.1b
GD General Dynamics	18.2x	9.6%	US$60.4b
LHX L3Harris Technologies	21.8x	7.3%	US$41.6b
RTX Raytheon Technologies	27.2x	16.4%	US$122.3b

Price-To-Earnings vs Peers: RTX is expensive based on its Price-To-Earnings Ratio (27.2x) compared to the peer average (18.9x).

Price to Earnings Ratio vs Industry

How does RTX's PE Ratio compare vs other companies in the US Aerospace & Defense Industry?

Price-To-Earnings vs Industry: RTX is expensive based on its Price-To-Earnings Ratio (27.2x) compared to the US Aerospace & Defense industry average (23.9x)

Price to Earnings Ratio vs Fair Ratio

What is RTX's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

RTX PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	27.2x
Fair PE Ratio	31.8x

Price-To-Earnings vs Fair Ratio: RTX is good value based on its Price-To-Earnings Ratio (27.2x) compared to the estimated Fair Price-To-Earnings Ratio (31.8x).

Share Price vs Fair Value

What is the Fair Price of RTX when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: RTX ($83.11) is trading below our estimate of fair value ($218.1)

Significantly Below Fair Value: RTX is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.

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Future Growth

How is Raytheon Technologies forecast to perform in the next 1 to 3 years based on estimates from 18 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

16.4%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: RTX's forecast earnings growth (16.4% per year) is above the savings rate (1.9%).

Earnings vs Market: RTX's earnings (16.4% per year) are forecast to grow faster than the US market (14.8% per year).

High Growth Earnings: RTX's earnings are forecast to grow, but not significantly.

Revenue vs Market: RTX's revenue (6.9% per year) is forecast to grow slower than the US market (7.7% per year).

High Growth Revenue: RTX's revenue (6.9% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: RTX's Return on Equity is forecast to be low in 3 years time (12.4%).

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Past Performance

How has Raytheon Technologies performed over the past 5 years?

Past Performance Score

4/6

Past Performance Score 4/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-19.2%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: RTX has high quality earnings.

Growing Profit Margin: RTX's current net profit margins (6.9%) are higher than last year (3.4%).

Past Earnings Growth Analysis

Earnings Trend: RTX's earnings have declined by 19.2% per year over the past 5 years.

Accelerating Growth: RTX's earnings growth over the past year (113%) exceeds its 5-year average (-19.2% per year).

Earnings vs Industry: RTX earnings growth over the past year (113%) exceeded the Aerospace & Defense industry 11.9%.

Return on Equity

High ROE: RTX's Return on Equity (6.5%) is considered low.

Discover strong past performing companies

Financial Health

How is Raytheon Technologies's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: RTX's short term assets ($41.5B) exceed its short term liabilities ($37.8B).

Long Term Liabilities: RTX's short term assets ($41.5B) do not cover its long term liabilities ($49.2B).

Debt to Equity History and Analysis

Debt Level: RTX's net debt to equity ratio (37%) is considered satisfactory.

Reducing Debt: RTX's debt to equity ratio has reduced from 87.1% to 43.6% over the past 5 years.

Debt Coverage: RTX's debt is well covered by operating cash flow (21.7%).

Interest Coverage: RTX's interest payments on its debt are well covered by EBIT (5.5x coverage).

Balance Sheet

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Dividend

What is Raytheon Technologies's current dividend yield, its reliability and sustainability?

Dividend Score

4/6

Dividend Score 4/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

2.65%

Current Dividend Yield

Dividend Yield vs Market

Raytheon Technologies Dividend Yield vs Market

How does Raytheon Technologies dividend yield compare to the market?
Segment	Dividend Yield
Company (Raytheon Technologies)	2.6%
Market Bottom 25% (US)	1.6%
Market Top 25% (US)	4.6%
Industry Average (Aerospace & Defense)	2.1%
Analyst forecast in 3 Years (Raytheon Technologies)	2.8%

Notable Dividend: RTX's dividend (2.65%) is higher than the bottom 25% of dividend payers in the US market (1.67%).

High Dividend: RTX's dividend (2.65%) is low compared to the top 25% of dividend payers in the US market (4.75%).

Stability and Growth of Payments

Stable Dividend: RTX's dividend payments have been volatile in the past 10 years.

Growing Dividend: RTX's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonable payout ratio (68.9%), RTX's dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: At its current cash payout ratio (75.6%), RTX's dividend payments are covered by cash flows.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

1.8yrs

Average management tenure

CEO

Greg Hayes (61 yo)

7.92yrs

Tenure

US$23,316,063

Compensation

Mr. Gregory J. Hayes, also known as Greg, serves as Independent Director at Phillips 66 since July 12, 2022. He is the Chairman of the Board at Raytheon Technologies Corporation since June 01, 2021 and ser...

CEO Compensation Analysis

Greg Hayes's Compensation vs Raytheon Technologies Earnings

How has Greg Hayes's remuneration changed compared to Raytheon Technologies's earnings?
Date	Total Comp.	Salary	Company Earnings
Jun 30 2022	n/a	n/a	US$4b
Mar 31 2022	n/a	n/a	US$4b
Dec 31 2021	US$23m	US$2m	US$4b
Sep 30 2021	n/a	n/a	US$3b
Jun 30 2021	n/a	n/a	US$2b
Mar 31 2021	n/a	n/a	-US$3b
Dec 31 2020	US$21m	US$1m	-US$3b
Sep 30 2020	n/a	n/a	-US$3b
Jun 30 2020	n/a	n/a	-US$2b
Mar 31 2020	n/a	n/a	US$3b
Dec 31 2019	US$22m	US$2m	US$4b
Sep 30 2019	n/a	n/a	US$4b
Jun 30 2019	n/a	n/a	US$4b
Mar 31 2019	n/a	n/a	US$5b
Dec 31 2018	US$18m	US$2m	US$1b
Sep 30 2018	n/a	n/a	US$5b
Jun 30 2018	n/a	n/a	US$5b
Mar 31 2018	n/a	n/a	US$4b
Dec 31 2017	US$17m	US$2m	US$5b
Sep 30 2017	n/a	n/a	US$5b
Jun 30 2017	n/a	n/a	US$5b
Mar 31 2017	n/a	n/a	US$5b
Dec 31 2016	US$16m	US$1m	US$5b
Sep 30 2016	n/a	n/a	US$4b
Jun 30 2016	n/a	n/a	US$4b
Mar 31 2016	n/a	n/a	US$4b
Dec 31 2015	US$11m	US$1m	US$4b

Compensation vs Market: Greg's total compensation ($USD23.32M) is above average for companies of similar size in the US market ($USD13.04M).

Compensation vs Earnings: Greg's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: RTX's management team is not considered experienced ( 1.8 years average tenure), which suggests a new team.

Board Members

Experienced Board: RTX's board of directors are considered experienced (3.2 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

NYSE:RTX Recent Insider Transactions by Companies or Individuals
Date	Value	Name	Entity	Shares	Max Price
27 Apr 22	BuyUS$19,800	James Winnefeld	Individual	200	US$99.00
18 Feb 22	SellUS$499,992	Tracy Atkinson	Individual	5,340	US$93.63
17 Feb 22	SellUS$1,416,656	Wesley Kremer	Individual	15,083	US$93.92
05 Nov 21	SellUS$271,623	Michael Dumais	Individual	3,000	US$90.54

Ownership Breakdown

What is the ownership structure of RTX?
Owner Type	Number of Shares	Ownership Percentage
Private Companies	73,282	0.005%
State or Government	635,436	0.04%
Individual Insiders	1,448,613	0.1%
General Public	272,945,777	18.5%
Institutions	1,196,656,879	81.3%

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Top Shareholders

Top 25 shareholders own 57.31% of the company

Ownership	Name	Shares	Current Value	Change %	Portfolio %
8.8%	State Street Global Advisors, Inc.	129,549,992	$10.8b	-1.67%	0.61%
8.75%	Capital Research and Management Company	128,791,920	$10.7b	8.33%	0.75%
8.32%	The Vanguard Group, Inc.	122,413,937	$10.2b	1.42%	0.24%
6.71%	BlackRock, Inc.	98,786,331	$8.2b	0.4%	0.2%
3.17%	Wellington Management Group LLP	46,701,977	$3.9b	-15.17%	0.71%
2.48%	Dodge & Cox	36,558,387	$3.0b	-4.35%	1.77%
1.84%	J.P. Morgan Asset Management, Inc.	27,099,133	$2.3b	7.35%	0.42%
1.69%	Geode Capital Management, LLC	24,841,857	$2.1b	2.48%	0.27%
1.63%	Morgan Stanley, Investment Banking and Brokerage Investments	23,945,240	$2.0b	-4.85%	0.4%
1.33%	ClearBridge Investments, LLC	19,608,436	$1.6b	-0.54%	1.52%
1.19%	BNY Mellon Asset Management	17,524,264	$1.5b	10.78%	0.33%
1.11%	Franklin Resources, Inc.	16,354,578	$1.4b	-1.33%	0.59%
1.05%	Columbia Management Investment Advisers, LLC	15,444,113	$1.3b	2.34%	0.39%
1.02%	UBS Asset Management	15,049,529	$1.3b	0.9%	0.24%
0.99%	Norges Bank Investment Management	14,506,997	$1.2b	0%	0.17%
0.95%	Northern Trust Global Investments	13,986,670	$1.2b	-0.33%	0.24%
0.92%	Teachers Insurance and Annuity Association-College Retirement Equities Fund	13,584,906	$1.1b	2.73%	0.38%
0.88%	Invesco Ltd.	12,959,019	$1.1b	-4.99%	0.37%
0.81%	Charles Schwab Investment Management, Inc.	11,927,305	$991.3m	-0.45%	0.27%
0.69%	Wells Fargo & Company, Securities and Brokerage Investments	10,099,337	$839.4m	-0.71%	0.37%
0.65%	FMR LLC	9,540,746	$792.9m	-16.74%	0.08%
0.62%	AllianceBernstein L.P.	9,060,429	$753.0m	3.06%	0.31%
0.57%	Merrill Lynch & Co. Inc., Banking Investments	8,446,684	$702.0m	2.79%	0.37%
0.57%	Fisher Asset Management, LLC	8,410,174	$699.0m	4.27%	0.52%
0.56%	Massachusetts Financial Services Company	8,308,658	$690.5m	-13.3%	0.18%

Ticker	Exchange	Primary Security	Security Type	Country	Currency	Listed on
RTX	NYSE (New York Stock Exchange)	Yes	Common Stock	US	USD	Jan 1968
5UR	DB (Deutsche Boerse AG)	Yes	Common Stock	DE	EUR	Jan 1968
UTX	BRSE (Berne Stock Exchange)	Yes	Common Stock	CH	CHF	Jan 1968
0R2N	LSE (London Stock Exchange)	Yes	Common Stock	GB	USD	Jan 1968
RTX *	BMV (Bolsa Mexicana de Valores)	Yes	Common Stock	MX	MXN	Jan 1968
RTX	SNSE (Santiago Stock Exchange)	Yes	Common Stock	CL	USD	Jan 1968
RTX	WBAG (Wiener Boerse AG)	Yes	Common Stock	AT	EUR	Jan 1968
RTX	BASE (Buenos Aires Stock Exchange)		CEDEARS REP 1/5 COM USD1	AR	ARS	Jul 2001
RTXD	BASE (Buenos Aires Stock Exchange)		CEDEARS REP 1/5 COM USD1	AR	USD	Jul 2001
RYTT34	BOVESPA (Bolsa de Valores de Sao Paulo)		EACH BDR REPR 1 COM USD1	BR	BRL	Dec 2014

Data	Last Updated (UTC time)
Company Analysis	2022/10/03 00:00
End of Day Share Price	2022/10/03 00:00
Earnings	2022/06/30
Annual Earnings	2021/12/31