RTX stock falls: Stock of RTX Falls 10% There will be airline checks because of problems with how engines are made. Tuesday, the share price of RTX, which is a big player in the aerospace industry, went down by 10% because of problems with making famous engines. “Accelerated” checks will need to be done on about 200 engines.
On RTX’s results call, it was said that the problem is with the powdered metal used in some engine parts. Luckily, this problem does not affect engines that are currently in use.
Because of the problem, Pratt & Whitney’s parent company, RTX, had to lower its prediction of cash flow for the year by $500 million, to $4.3 billion.
RTX CEO Greg Hayes talked about how expensive it is to find an answer during the earnings call. But he said that the company will pay the airlines for the trouble.
Even though the tourism business is growing, it is harder for airlines to find planes that work because of the engine problem. There is a big backlog in getting planes to different airlines.
Pratt & Whitney thinks that about 1,000 more engines will be taken out of flight fleets because of this problem in the next 912 months.
Noah Poponak, an expert at Goldman Sachs, said that the effects might not be fixed until the next year, or even until 2025, if the engine needs to be fixed right away.
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Poponak, who has a neutral opinion on RTX and a price target of $102 for the next 12 months, thinks the market’s reaction is right. On Tuesday, the price of RTX stock was $87.10.
Poponak says that these engines have had repair problems in the past, especially when they were in hot places. This is stuff you should think about.
RTX will keep sending engines and parts for planes out to the public to make sure that flights are safe. This comment made people feel better.
Some A320neos will be affected by the problem. These are famous narrow-body planes that compete with the Boeing 737 Max.
Pratt & Whitney and affected companies are working with the FAA to take the proper steps.
Delta Air Lines, a major Airbus customer, is investigating the issue. Airbus is silent. JetBlue Airways is working with Pratt & Whitney to decide what will happen to its fleet, a spokesman said.
General Electric, a competitor that builds engines, rose more than 6% on Tuesday to a five-year high. The company increased its sales and cash flow expectations for next year due to jet engine demand.
Our Reader’s Queries
RTX shares have been on a downward trend lately, following the announcement of a financial setback caused by a Pratt & Whitney engine defect. While the company is expected to weather the storm, it remains unclear how long it will take or how much it will cost to fully resolve the issue. Nonetheless, RTX is poised to overcome this challenge and emerge stronger than ever.
Why is RTX going down?
Last July, the company encountered a snag with its PW1100G-JM engine, which is responsible for powering the Airbus A320neo. Recently, the company disclosed that this issue would result in significant charges and a loss of free cash flow amounting to billions. As a result, RTX’s shares have plummeted by 14% in the last 30 days and are currently 28% lower than their peak for the year.
Is RTX a good stock to buy now?
Based on valuation metrics, RTX Corporation appears to be reasonably priced. With a Value Score of C, it is considered a neutral option for value investors. Despite having a Growth Score of F, RTX’s financial health and growth potential suggest that it could perform in line with the market. Using these indicators, it seems that RTX could be a solid choice for investors seeking a balanced approach.
Is RTX stock undervalued?
Despite strong growth, RTX’s current share price is undervalued due to an overvalued PEG ratio. Its PE and PEG ratios are below the market average, resulting in a below average valuation score.