Aerospace giant RTX (NYSE: RTX) reported better-than-expected quarterly results and raised its guidance for the year. Investors are climbing on board, sending RTX shares up 9% as of noon ET.
Commercial aerospace is soaring
RTX, formerly known as Raytheon Technologies, is a maker of commercial aircraft engines and interiors and a major supplier to the Pentagon. The company earned $1.41 per share in the second quarter on revenue of $19.7 billion, easily surpassing Wall Street's consensus estimate of $1.19 per share on sales of $17.8 billion.
Sales were up 10% year over year, and the company generated $2.2 billion in free cash flow. Post-earnings RTX raised its full-year earnings guidance to a range of $5.35 to $5.45 per share, from $5.25 to $5.40 per share. That is well above the $4.95 consensus heading into earnings season. Revenue guidance was raised to $79.1 billion at the midpoint, from $78.5 billion.
"RTX delivered strong operational performance in the second quarter," CEO Chris Calio said in a statement. "The strength in our end markets and first half performance give us the confidence to increase our outlook for adjusted sales and adjusted EPS for the full year."
Pratt & Whitney, the company's jet engine unit, led the way thanks to strong aftermarket, or spare parts, demand.
Is RTX stock a buy?
A year ago this month, all the talk around RTX involved a massive recall of its PW1100G-JM engine that would require a costly fix. The company took more than $5 billion worth of charges related to that issue but appears to have it under control.
The stock fell about 30% in the months that followed the disclosure of that recall but had just about recovered heading into earnings season. Thursday's jump leaves RTX shares about 16% higher than where they were prior to the disclosure.
As conditions normalize, RTX is unlikely to see too many big jumps like today in its future. But the company is a steady performer and a cash generation machine that should continue to benefit from global demand for aircraft equipment.
For those looking for a stable element to add to their portfolio, RTX is once again an attractive option.
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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool recommends RTX. The Motley Fool has a disclosure policy.
