A month has gone by since the last earnings report for RTX (RTX). Shares have added about 1.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is RTX due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

RTX Q4 Earnings & Sales Beat Estimates, Increase Year Over Year

RTX Corporation’s fourth-quarter 2024 adjusted earnings per share (EPS) of $1.54 beat the Zacks Consensus Estimate of $1.37 by 12.4%. The bottom line also improved 19.4% from the year-ago quarter’s level of $1.29, driven by growth in adjusted segment operating profit.

Including one-time items, the company reported GAAP earnings of $1.10 per share, marking an improvement from $1.05 in the prior-year quarter.

The improvement can be attributed to higher sales, along with higher operating profit than the prior-year quarter’s level.

For 2024, the company reported adjusted EPS of $5.73, which surpassed the consensus estimate of $5.56 billion. The full-year bottom line also improved 13% from the year-ago reported figure of $5.06.

Operational Performance

RTX’s fourth-quarter sales totaled $21.62 billion, which surpassed the Zacks Consensus Estimate of $20.56 billion by 5.2%. The top line also surged a solid 8.5% from $19.93 billion recorded in the fourth quarter of 2023.

The top-line improvement was driven by higher sales growth from RTX’s Pratt & Whitney, Raytheon and Collins Aerospace business segments.

For 2024, the company generated adjusted sales of $80.81 billion, which surpassed the consensus estimate of $79.75 billion. The full-year top line also improved 17% from the year-ago reported figure of $68.92 billion.

Total costs and expenses increased 9.1% year over year to $19.77 billion in the fourth quarter. The company generated an adjusted operating profit of $2.85 billion compared with $2.27 billion in the prior-year quarter.

RTX posted an interest expense of $486 million compared with $488 million in the prior-year period.

Segmental Performance

Collins Aerospace: Sales in this segment totaled $7.54 billion, up 6% year over year.  This improvement can be attributed to higher commercial aftermarket sales, backed by continued growth in commercial air traffic. Increased defense sales, driven by higher volumes across multiple programs, also contributed favorably to this unit’s sales growth.

The segment’s adjusted operating profit totaled $1.21 billion compared with $1.04 billion in the year-ago quarter.

Pratt & Whitney: This segment’s sales totaled $7.57 billion, reflecting an improvement of 18% from the year-ago quarter’s reported number. This improvement can be attributed to sales growth in the commercial aftermarket and commercial OEM businesses, driven by increased deliveries and favorable OEM mix in Large Commercial Engines, and higher commercial aftermarket volume. Increased military sales on the back of higher volume for F135 production, the F135 Engine Core Upgrade program, and F135 sustainment also contributed favorably to this unit’s sales growth.

The adjusted operating profit totaled $717 million, up from $405 million in the year-ago quarter.

Raytheon: This segment recorded sales of $7.16 billion, up 4% year over year, primarily driven by higher volume on land and air defense systems, including Global Patriot, NASAMS and counter-UAS programs, as well as higher volume from the restart of contracts with a Middle East customer.

The segment’s adjusted operating profit amounted to $728 million compared with $618 million recorded in the corresponding period of 2023.

Financial Update

RTX had cash and cash equivalents of $5.58 billion as of Dec. 31, 2024, compared with $6.59 billion as of Dec. 31, 2023.

The long-term debt totaled $38.73 billion as of Dec. 31, 2024, down from $42.36 billion as of Dec. 31, 2023.

Net cash flow from operating activities was $7.16 billion as of Dec. 31, 2024, compared with $7.88 billion at the end of 2023.

Free cash outflow totaled $4.53 billion at the end of the fourth quarter of 2024 compared with $5.47 billion at the end of 2023.

Guidance

RTX issued its financial guidance for 2025.

The company expects adjusted EPS to be in the band of $6.00-$6.15. The Zacks Consensus Estimate for 2025 EPS is pegged at $6.06, which lies lower than the mid-point of the company’s guided range.

RTX projects its sales to be in the band of $83-$84 billion for 2025. The Zacks Consensus Estimate for sales is pegged at $84.08 billion, which lies above the midpoint of the company’s guided range.

RTX expects to generate free cash flow of $7.0-$7.5 billion for 2025.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, RTX has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, RTX has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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This article originally published on Zacks Investment Research (zacks.com).

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