2024-01-30 03:18:25 ET
Summary
- RTX announced its Q4 and FY23 earnings on January 23, revealing a beat in top and bottom line with sales up 10.8% YoY and 70bps segment margin expansion to 10.8%.
- Q4 showed ongoing strength, particularly in its aerospace business with 19% YoY growth across OE and aftermarket as global aviation activity continued to recover and surpassed 2019 levels.
- Backlog grew 12% YoY to a record $196bn (commercial: 11% YoY / defense: 13% YoY) with FY23 book-to-bill at 1.28.
- Despite strong aerospace performance, margins at Raytheon remain under pressure from fixed-price and supply chain inflation, leading to a slight downward revision in midterm FY25 guidance.
- With management guiding to a "much of the same" FY24, I reiterate my overweight rating on RTX shares and update my price target to $110 on the back of rolling forward my valuation.
Key Highlights
Commercial Aerospace continues to fly high
RTX' ( RTX ) commercial aerospace businesses at Collins and Pratt were once again the key driver of revenue growth and margin expansion, both for Q4 and for FY23. Collins grew Q4 revenues by 12%, with operating margins ending the year at 14.8%. For the entirety of FY23, Collins revenues grew 13.6% with operating profit surging ~28% on the back of a 170bps margin expansion from higher volumes in both OE and aftermarket. Aftermarket specifically performed strongly with Q4 showing a 23% YoY growth while OE grew 17% YoY....
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RTX Q4 2023: Flying High On Aerospace Strength