RTX's Disappointing Update: Is Now a Golden Opportunity to Buy, or the Time to Bail Out?
(NYSE: RTX), formerly known as Raytheon Technologies, raised its full-year sales and earnings guidance when it issued its second-quarter report last week. In addition, the company reported that it received a whopping $25 billion in orders in the quarter, giving it a book-to-bill ratio of 1.34 in the quarter and a record backlog of $185 billion.
Still, all of that was somewhat far from RTX investors' minds as they digested a piece of disappointing news regarding an issue with the Pratt Whitney's unit's geared turbofan (GTF) engine. An issue that will hit the company hard.
Pratt Whitney's GTF is RTX's answer to General Electric's dominance of the narrowbody engine market. GE's joint venture with Safran, CFM International, makes the sole engine used on the Boeing 737 MAX, but Airbus A320neo customers have a choice between CFM engines or GTFs. Airplane engines are often sold at a loss. The real money comes from contracts to service the engines and spare parts sales, which provide long-term earnings and cash flow.
Source Fool.com
