It’s time to breakdown a major aerospace and defense name. Here is the breakdown on $RTX, otherwise known as Raytheon Technologies.
Current Price: $67.58
52/Wk High: $93.45
52/Wk Low: $40.71
Market Cap: $102.6 Billion
Dividend: $1.90 / 2.76% Yield
Read below for the breakdown!
Raytheon Technologies is a major aerospace and defense company that operates in a vast multitude of segments throughout the aerospace and defense industry.
Breaking down Raytheon’s segments, the company operates through the following four segments.
Pratt & Whitney
Raytheon Intelligence & Space
Raytheon Missiles & Defense
Exploring Raytheon, the Collins Aerospace segment is focused on aerostructures, mechanical systems, avionics, and much more for all parts of the aerospace industry.
Not only that, but the Collins Aerospace segment employs 78,000 employees, maintains 16,000 engineers, and as of 2019 turned out annual sales of $26 billion.
Shifting into the Pratt & Whitney segment, the segment focuses on the design, manufacturing, and upkeep of advanced aircraft. The segment employs 43,000 and as of 2019 averaged $21 billion in annual sales.
As for Intelligence & Space, the segment focuses on “disruptive technologies” that provide advantages for military and commercial companies. The segment currently employs 35,700 people and as of 2019 maintained annual sales of $14 billion.
Finally, the Raytheon Missiles & Defense segment focuses on missile defense systems, precision weapons, and much more. The segment employs 30,000 and as of 2019 maintained annual revenues of $16 billion.
Digging into the numbers Raytheon Technologies beat Q3 expectations with an EPS of $0.58, better than the expected EPS of $0.50. Although, on a year over year basis EPS has declined 73.76%.
Furthermore, Raytheon reported sales of $14.7 billion for Q3, which according to management was in line with expectations. When it comes to income, Q3 net income totaled $151 million.
As for Raytheon’s backlog, as of the end of Q3, the company’s backlog totaled $152.3 billion, with $82.1 billion being commercial aerospace and $70.2 billion being defense.
Operating cash flow from continuing operations totaled $1.622 billion and free cash flow totaled $1.233 billion.
Below are the sales results segment by segment.
Collins Aerospace: $4.274 billion (-34% YoY)
Pratt & Whitney: $3.494 billion (-34% YoY)
Intelligence & Space: $3.674 billion
Missiles & Defense: $3.794 billion
Shifting into the balance sheet the numbers could see improvement.
Total Debt: $32.781 billion
Total Liabilities: $94.020 billion
Total Assets: $162.399 billion
Cash & Short Term Inv: $10.001 billion
As for valuation, Raytheon is not super expensive.
Price to Sales: 1.73x
Price to Book: 1.51x
Price to Cash Flow: 19.12x
When it comes to management, leadership could be more effective.
Return on Equity: -3.88%
Return on Assets: -1.24%
Return on Invested Capital: -1.66%
Given the numbers, the analysts see an opportunity with a mean price target of $80.78/share, representing a 19.53% gain.
It is also important to note that the high price target is $90.00/share, representing a 33.18% upside, while the low price target is $70.00/share, representing a 3.58% gain.
The big money is quite involved as well, with 74.21% of Raytheon being owned by institutions. Top holders include The Vanguard Group, State Street Global Advisors, and BlackRock Institutional Trust.
On a technical basis, Raytheon could be presenting an opportunity. According to the six-month charts the MACD is trending to the downside with minimal momentum around -0.0377.
The six-month charts are also indicating an RSI of 39.9 and CCI of -179.5659, both of which are on the low end.
In short, the COVID-19 pandemic has created troubles for Raytheon but the stock could be a big comeback play as the world recovers.
EAT - SLEEP - PROFIT
Disclaimer: This is not direct financial advice, simply an opinion based on independent research.