RTX

Raytheon Technologies Corporation

Industrial/Transportation


Presented:09/23/2020
Price:$58.33
Cap:$89.11B
Current Price:$125.03
Cap:$166.32B

Presented

Date09/23/2020
Price$58.33
Market Cap$89.11B
Ent Value$121.71B
P/E RatioN/A
Book Value$44.01
Div Yield3.22%
Shares O/S1,527.66M
Ave Daily Vol8,809,340
Short Int0.81%

Current

Price$125.03
Market Cap$166.32B
Raytheon Technologies Corp. engages in the provision of aerospace and defense systems and services for commercial, military, and government customers. It operates through the following segments: Collins Aerospace Systems, Pratt and Whitney, Raytheon Intelligence and Space, and Raytheon Missiles and Defense. The Collins Aerospace Systems segment specializes in the aero structures, avionics, interiors, mechanical systems, mission systems, and power controls. The Pratt and Whitney segment includes design and manufacture of aircraft engines and auxiliary power systems for commercial, military, and business aircraft. The Raytheon Intelligence and Space segment involves in the development of sensors, training, and cyber and software solutions. The Raytheon Missiles and Defense segment offers end-to-end solutions to detect, track, and engage threats. The company was founded in 2020 and is headquartered in Waltham, MA.

Publicly traded companies mentioned herein: Raytheon Technologies Corp (RTX)

Highlights

The presenter is long shares of Raytheon Technologies Corp (RTX), which is made up of two businesses with different end markets. Its defense business accounts for 55% of revenue, while commercial aerospace represents the remaining 45% but is currently significantly depressed as a result of COVID-19. Despite the cyclically depressed environment, the presenter is bullish because RTX is trading at a ~7% FCF yield on next year’s consensus EPS estimate of ~$4. Based on the belief that commercial aerospace will eventually recover, he thinks that investors can buy cheap optionality on one of the premier franchises in the space; meanwhile, the defense business will act as an “anchor” through its cash flow visibility. When the commercial aerospace business recovers, RTX could generate $8 – $9 of FCF per share, and the presenter expects it to trade at a 5% – 6% FCF yield. This implies material upside from the current ~$57 share price to $133 – $180. 

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Idea Discussion

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