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United Technologies (RTX) Gains But Lags Market: What You Should Know

Zacks Equity Research

In the latest trading session, United Technologies (RTX) closed at $63.42, marking a +1.23% move from the previous day. This change lagged the S&P 500's 2.29% gain on the day. Meanwhile, the Dow gained 1.99%, and the Nasdaq, a tech-heavy index, added 2.81%.

Coming into today, shares of the maker of elevators, jet engines and other products had lost 27.79% in the past month. In that same time, the Aerospace sector gained 15.62%, while the S&P 500 gained 19.13%.

Wall Street will be looking for positivity from RTX as it approaches its next earnings report date. This is expected to be May 7, 2020. In that report, analysts expect RTX to post earnings of $1.11 per share. This would mark a year-over-year decline of 41.88%. Meanwhile, our latest consensus estimate is calling for revenue of $18.14 billion, down 1.25% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.60 per share and revenue of $68.89 billion, which would represent changes of -56.42% and -10.59%, respectively, from the prior year.

Any recent changes to analyst estimates for RTX should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 54.35% lower. RTX currently has a Zacks Rank of #5 (Strong Sell).

Valuation is also important, so investors should note that RTX has a Forward P/E ratio of 17.41 right now. This valuation marks a premium compared to its industry's average Forward P/E of 17.11.

It is also worth noting that RTX currently has a PEG ratio of 1.45. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Aerospace - Defense Equipment was holding an average PEG ratio of 2.32 at yesterday's closing price.

The Aerospace - Defense Equipment industry is part of the Aerospace sector. This industry currently has a Zacks Industry Rank of 169, which puts it in the bottom 34% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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