RTX - Embedded Expectations Analysis - 2021 03 15
Raytheon Technologies Corporation (RTX:USA) currently trades below recent averages relative to UAFRS-based (Uniform) earnings, with a 16.7x Uniform P/E. Even at these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about meeting their 2021 guidance, their cash on hand, and the sustainability of M&A synergiesSpecifically, management may lack confidence in their ability to meet their 2021 EPS and sales guidance and mitigate Raytheon Intelligence & Space (RIS) operating profit and Pratt segment sales declines. In addition, they may have concerns about the pace of the recovery of aftermarket sales, their contractor headcount, and their outsized cash position. Moreover, management may lack confidence in their ability to remain committed to their cash conservation and generate further synergies from the Raytheon merger and Rockwell Collins acquisition. Furthermore, they may be exaggerating the capabilities of their enhanced air filtration systems and their ability to recover to pre-pandemic projected cash flow levels. Finally, management may lack confidence in their ability to expand Collins segment margins through the aftermarket and ramp RMD and RIS segment volumes
Raytheon Technologies is an aerospace and defense company providing systems and services for commercial, military and government customers. Collins Aerospace Systems specializes in aerostructures, avionics, interiors, mechanical systems, mission systems and power controls that serve customers across the commercial, regional, business aviation and military sectors. Pratt & Whitney designs, manufactures and services aircraft engines and auxiliary power systems for commercial, military and business aircraft. Raytheon Intelligence & Space develops sensors, training, and cyber and software solutions. Raytheon Missiles & Defense provides end-to-end solutions to detect, track and engage threats.
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