RTX Stock Rallies On Earnings, Engine Defect Update. General Dynamics, Northrop To Report.

RTX stock spiked early Tuesday after the leading defense contractor reported Q3 earnings. General Dynamics (GD) reports on Wednesday followed by Northrop Grumman (NOC) on Thursday.

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The backdrop of a developing war between Israel and Hamas sparked greater interest in defense companies ahead of the earnings season. RTX stock is up 5.5% since Hamas’ Oct. 7 attack on Israeli civilians. General Dynamics shares jumped 6.6% since the outbreak of the conflict while NOC stock rallied 14.3%. Lockheed Martin (LMT) beat forecasts for its Q3 results last Tuesday and LMT stock is up 11.9% since Oct. 7.

RTX Earnings

RTX (RTX) reported 3.3% adjusted earnings growth to $1.25 per share on 12% sales growth to $19 billion. GAAP earnings were a loss of 68 cents per share. That included the impact of the Pratt powder metal defect and accounting adjustments. Including the engine defect, sales fell 21% to $13.5 billion.

FactSet analysts expected the missile and fighter jet components supplier to report a slight uptick in adjusted earnings to $1.22 per share on 9.7% sales growth, to $18.59 billion. Wall Street forecasts had GAAP earnings down nearly 82% to 17 cents per share.

RTX’s backlog totaled $190 billion for the quarter, including $115 billion of commercial orders and $75 billion of defense orders.

The company also announced plans to sell its cybersecurity, intelligence and services business within its Raytheon segment for $1.3 billion.

For the year, RTX sees adjusted sales of $74 billion, the top end of its previous forecast. The defense contractor narrowed its adjusted earnings outlook to range between $4.98 to $5.02 per share, compared to the prior range of $4.95 to $5.05 per share. RTX expects free cash flow to improve to $4.8 billion from $4.3 billion.

In addition, the company plans to repurchase $12.8 billion of RTX stock, compared to $3 billion in 2022.

Engine Defect

RTX stock dove in late July after its Q2 earnings beat revealed a manufacturing defect in the powdered metal used for engine parts in its Pratt & Whitney unit.

RTX CEO Greg Hays noted on Tuesday the…

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