RTX Corp (RTX, Financial) shares experienced a significant decline of 10.32% today, closing at $113.105. This drop was primarily driven by investor concerns about the potential impact of tariffs on the company's operational profitability.
RTX's first-quarter earnings report revealed a stable performance, with the management upholding their projections of a 4%-6% organic sales growth and an adjusted EPS ranging from $6.00 to $6.15. Furthermore, RTX anticipates a free cash flow between $7 billion and $7.5 billion for the full year.
The primary factor behind today's drop is the management's announcement regarding potential tariff impacts. The company estimates the total impact to be around $850 million, distributed as follows:
- Canada and Mexico tariffs: approximately $250 million
- China/China-related tariffs: approximately $250 million
- Global reciprocal tariffs: approximately $300 million
- Steel and aluminum tariffs: approximately $50 million
This substantial impact on operating profit has understandably raised concerns among investors.
RTX's financial analysis shows some interesting insights. With its market cap standing at $151,005.35 million and a PE ratio of 31.86, RTX appears to be under significant financial pressure. The financial strength indicators reveal a grey area with an Altman Z-Score of 2.12, suggesting some level of financial stress. Profitability concerns are also evident, with the gross margin experiencing a decline at an average rate of -1.7% annually.
Despite these challenges, RTX holds a Piotroski F-Score of 7, indicating a healthy financial situation. Additionally, the company demonstrates expanded operating margins, which is generally a positive sign for future profitability. The stock's GF Value is considered "Modestly Undervalued," with a gf_value of $128.42. For further insights, visit the GF Value page.
On the downside, RTX's long-term debt position shows ongoing issuance, having added $9.9 billion over the past three years. The company has faced at least one loss in operating income in the recent past, indicating some operational challenges. Furthermore, insider selling, with 8 transactions in the last three months, adds to the concerns regarding the stock's trajectory.
Conclusively, while RTX maintains a position in a promising sector, the immediate concerns over tariff impacts and financial stress have led to a cautious stance from investors, reflected in today’s stock performance.
