Should You Buy, Hold or Sell RTX Stock Post Q1 Earnings Release?

Financial Performance - RTX Corp. reported adjusted earnings per share (EPS) of $1.47, exceeding the Zacks Consensus Estimate by 9% [1] - Revenues surpassed the consensus mark by 3%, showing solid year-over-year growth in sales and earnings [1] - The company ended the first quarter with cash and cash equivalents of $5.16 billion [1] Business Segments - All business units, except Raytheon, registered positive growth, driven by sustained demand for defense products and commercial OEM and aftermarket sales [1] - Collins Aerospace unit saw an 8% year-over-year improvement in top-line figures, with a 13% increase in commercial aftermarket sales [6] - Pratt & Whitney unit experienced a 14% rise in adjusted sales, supported by a 3% rise in commercial OEM and a 28% improvement in commercial aftermarket sales [7] Market Performance - RTX shares surged 22.2% over the past year, outperforming the Zacks Aerospace-Defense industry (3.4%) and the broader Zacks Aerospace sector (7.8%) [3] - The stock also outpaced the S&P 500's return of 8.2% during the same period [3] Growth Prospects - The commercial aerospace market is projected to grow, with the International Air Transport Association (IATA) estimating a 3.8% annual increase in global passengers over the next two decades [10] - This growth is expected to boost demand for new aircraft, enhancing commercial OEM and aftermarket sales for RTX [10] - RTX's defense business unit has a solid backlog of $92 billion as of March 31, 2025, indicating strong growth opportunities amid geopolitical tensions [11] Earnings Estimates - The Zacks Consensus Estimate for second-quarter and full-year 2025 revenues suggests improvements of 5.3% and 4.1%, respectively, from prior-year levels [13] - However, there has been a downward revision in the company's 2025 and 2026 earnings estimates over the past 60 days, indicating declining investor confidence [13] Valuation - RTX's forward 12-month price-to-earnings (P/E) ratio is 19.91X, which is a premium compared to the industry average of 18.35X [16] - This suggests that investors are paying a higher price relative to the company's expected earnings growth compared to its industry peers [16]