RTX Stock Jumps After Earnings. Momentum Is Building.

Coming into Tuesday trading, RTX shares were up about 39% this year, boosted by strong demand for commercial air travel and increased defense spending around the globe. (ED JONES/AFP via Getty Images)

Key Points

• RTX reported third-quarter earnings per share of $1.70 and sales of $22.5 billion, exceeding Wall Street estimates.
• Sales increased across all divisions, with Pratt & Whitney up 16%, Collins aerospace up 8%, and Raytheon defense up 10%.
• The company raised its full-year earnings per share guidance to a range of $6.10 to $6.20 from $5.80 to $5.95.

RTX shares popped after the aerospace and defense company posted better-than-expected third-quarter results. The business is in a good place right now.

On Tuesday, RTX announced earnings per share of $1.70, up 17% year over year, from sales of $22.5 billion, which rose 12%. Wall Street had projected earnings of $1.41 and sales of $21.3 billion, according to FactSet.

Shares surged 7.7% to $173.04 on Tuesday. The S&P 500 was flat and the Dow Jones Industrial Average added 0.5%.

“Good performance across the board,” wrote Vertical Research Partners analyst Rob Stallard in a Tuesday report. Revenues “were better than we had projected in all three divisions, with notable upside at [jet engine division] Pratt & Whitney,” he added.

He rates shares Buy and has a $172 price target for the stock.

Sales at Pratt advanced 16% year over year. Sales in the Collins Aerospace division rose 8%. Sales in the Raytheon defense business grew 10%.

Full-year financial guidance was also raised. RTX management expects EPS to land between $6.10 and $6.20, up from a prior range of $5.80 to $5.95. The new guidance implies fourth-quarter earnings per share of about $1.42 a share. Wall Street projects closer to $1.50, but a conservative guide isn’t impacting investors’ view of the quarter.

“Strong execution in the third quarter enabled us to deliver double-digit organic sales growth,” said CEO Chris Calio in a news release. “We remain focused on executing on our $251 billion backlog and increasing our output to support the ramp across critical programs, while investing in next-generation products and services that meet the needs of our customers.”

Backlog ended the second quarter at $236 billion, up 15% year over year.

Coming into Tuesday trading, RTX shares were up about 39% this year, boosted by strong demand for commercial air travel and higher defense spending around the globe.

Write to Al Root at allen.root@dowjones.com