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Raytheon Technologies Corp RTX

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Challenges in Commercial Aftermarket Strain Raytheon Technologies Third Quarter; FVE $77

Burkett Huey, CFA Equity Analyst

Analyst Note

| Burkett Huey, CFA |

Wide-moat Raytheon Technologies reported a difficult third quarter, as the pandemic continues to halt commercial aviation, but the company’s defense business supported cash flow. Adjusted earnings per share came in at $0.58, and comparisons with the prior year are not meaningful as the company spun off two major segments and acquired Raytheon in an all-stock transaction in the interim. We are slightly decreasing our fair value estimate to $77 per share, as we slow down the company’s sales and margin recovery in its Pratt & Whitney jet engine segment and Collins Aerospace segment.

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Company Profile

Business Description

Raytheon Technologies is a diversified aerospace and defense industrial company formed from the merger of United Technologies and Raytheon, with roughly equal exposure as a supplier to the commercial aerospace manufactures and to the defense market as a prime and subprime contractor. The company operates in four segments: Pratt & Whitney, an engine manufacturer, Collins Aerospace, which is a diversified aerospace supplier, and intelligence, space and airborne systems, a mix between a sensors business and a government IT contractor, and integrated defense and missile systems, a defense prime contractor focusing on missiles and missile defense hardware.

870 Winter Street
Waltham, MA, 02451
T +1 781 522-3000
Sector Industrials
Industry Aerospace & Defense
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2019
Stock Type High Yield
Employees 243,200