Stock Analysis on Net

RTX Corp. (NYSE:RTX)

$24.99

Economic Value Added (EVA)

Microsoft Excel

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Economic Profit

RTX Corp., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net operating profit after taxes (NOPAT)1
Cost of capital2
Invested capital3
 
Economic profit4

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= × =


Net Operating Profit After Taxes (NOPAT)
The net operating profit after taxes exhibited significant improvement over the analyzed period. From a substantial loss of 1,590 million US dollars in 2020, the company shifted to positive figures from 2021 onward. NOPAT increased to 5,054 million in 2021, then slightly decreased in the subsequent two years to 4,663 million in 2022 and 4,118 million in 2023. The year 2024 showed a marked rebound with NOPAT reaching 6,483 million, indicating a strong recovery and operational profitability enhancement.
Cost of Capital
The cost of capital maintained a relatively stable trend with minor fluctuations. It started at 6.66% in 2020 and showed a slight upward tendency to 7.09% by 2024. This gradual increase reflects a modest rise in the company’s capital expense, which could be linked to changes in market conditions or the company’s risk profile.
Invested Capital
The invested capital consistently decreased throughout the period under review, moving from 115,597 million US dollars in 2020 down to 111,328 million in 2024. This steady reduction suggests a gradual divestment or efficient capital management strategy aimed at optimizing asset utilization or reducing investment bases.
Economic Profit
Economic profit remained negative during the entire timeframe but improved significantly. The loss narrowed from 9,288 million US dollars in 2020 to 1,414 million in 2024. Despite this persistent negative value, the trend indicates a reduction in economic losses, reflecting progress in value creation and possibly a move toward exceeding the cost of capital in the near future.

Net Operating Profit after Taxes (NOPAT)

RTX Corp., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net income (loss) attributable to common shareowners
Deferred income tax expense (benefit)1
Increase (decrease) in allowance for expected credit losses2
Increase (decrease) in equity equivalents3
Interest expense
Interest expense, operating lease liability4
Adjusted interest expense
Tax benefit of interest expense5
Adjusted interest expense, after taxes6
Interest income
Investment income, before taxes
Tax expense (benefit) of investment income7
Investment income, after taxes8
(Income) loss from discontinued operations, net of tax9
Net income (loss) attributable to noncontrolling interest
Net operating profit after taxes (NOPAT)

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance for expected credit losses.

3 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to common shareowners.

4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =

6 Addition of after taxes interest expense to net income (loss) attributable to common shareowners.

7 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =

8 Elimination of after taxes investment income.

9 Elimination of discontinued operations.


Net Income (Loss) Attributable to Common Shareowners
The data reveals a significant turnaround in net income over the five-year span. Starting with a substantial loss of $3,519 million in 2020, the company moved to positive net income in 2021, earning $3,864 million. This positive trajectory continued with net income increasing to $5,197 million in 2022. However, there was a notable decline in 2023, with net income dropping to $3,195 million. The year 2024 saw a substantial recovery, with net income rising again to $4,774 million. Overall, the trend shows strong volatility but an underlying recovery and growth following initial losses.
Net Operating Profit After Taxes (NOPAT)
NOPAT also exhibits considerable improvement from 2020 through 2024. It started in negative territory at -$1,590 million in 2020, then sharply increased to $5,054 million in 2021. A slight decrease occurred in 2022, with NOPAT falling to $4,663 million, followed by a further decline to $4,118 million in 2023. In 2024, there was a substantial increase to $6,483 million, marking the highest point during the observed period. This suggests strong operating performance recovery and improved profitability post-2020.
General Observations
Both net income and NOPAT reveal a pattern of initial recovery after a period of losses, with some fluctuations between 2022 and 2023. The company demonstrates resilience with net income and operating profit growing significantly from 2020 lows to much higher figures by 2024. The decline in 2023 warrants attention as it interrupts the otherwise upward trend, but the subsequent recovery indicates an overall positive financial health trajectory.

Cash Operating Taxes

RTX Corp., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Income tax expense
Less: Deferred income tax expense (benefit)
Add: Tax savings from interest expense
Less: Tax imposed on investment income
Cash operating taxes

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).


Income Tax Expense
The income tax expense exhibits variability over the analyzed five-year period. Starting at 575 million US dollars in 2020, it increased notably to 786 million in 2021. However, in 2022, it declined to 700 million before experiencing a further reduction to 456 million in 2023. In 2024, a significant rise to 1181 million occurred, marking the highest level in the period. The fluctuation suggests the influence of changing taxable income, tax rates, or tax planning strategies impacting reported tax expenses.
Cash Operating Taxes
Cash operating taxes show a generally upward trend with some volatility. Beginning at 978 million US dollars in 2020, this figure increased to 1158 million in 2021. A sharp and substantial increase to 2635 million is seen in 2022, more than doubling the previous year’s amount. This peak was followed by a considerable decline to 1197 million in 2023. In 2024, cash operating taxes rose again to 1638 million. This pattern indicates significant fluctuations in actual cash tax payments, potentially reflecting changes in tax regulations, timing of tax payments, or differences between accounting tax expense and cash tax outflows.

Invested Capital

RTX Corp., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Short-term borrowings
Long-term debt currently due
Long-term debt, excluding currently due
Operating lease liability1
Total reported debt & leases
Shareowners’ equity
Net deferred tax (assets) liabilities2
Allowance for expected credit losses3
Equity equivalents4
Accumulated other comprehensive (income) loss, net of tax5
Redeemable noncontrolling interest
Noncontrolling interest
Adjusted shareowners’ equity
Marketable securities held in trusts6
Invested capital

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of equity equivalents to shareowners’ equity.

5 Removal of accumulated other comprehensive income.

6 Subtraction of marketable securities held in trusts.


Total Reported Debt & Leases
The total reported debt and leases remained relatively stable from 2020 through 2022, with values around 33,800 million US dollars. However, a notable increase occurred in 2023, where the amount rose sharply to 45,587 million US dollars. This increase was followed by a slight decline in 2024 to 43,260 million US dollars, yet still remaining substantially higher than the levels observed in the initial years.
Shareowners’ Equity
Shareowners’ equity showed a slight upward trend from 2020 to 2021, reaching 73,068 million US dollars. It then experienced a minor decrease in 2022, followed by a significant reduction in 2023 to 59,798 million US dollars. In 2024, the equity levels stabilized modestly with a small increase to 60,156 million US dollars, but overall, the equity remained below the earlier period’s highs.
Invested Capital
Invested capital demonstrated a gradual decline over the entire period. From 115,597 million US dollars in 2020, it decreased steadily each year to reach 111,328 million US dollars by 2024. This consistent downward trend suggests a contraction in the company's invested assets or capital base over this timeframe.

Cost of Capital

RTX Corp., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2024-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2023-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2022-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2021-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2020-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

RTX Corp., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1
Invested capital2
Performance Ratio
Economic spread ratio3
Benchmarks
Economic Spread Ratio, Competitors4
Boeing Co.
Caterpillar Inc.
Eaton Corp. plc
GE Aerospace
Honeywell International Inc.
Lockheed Martin Corp.

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Economic profit. See details »

2 Invested capital. See details »

3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =

4 Click competitor name to see calculations.


Economic Profit
The economic profit figures indicate a persistent negative performance across all periods. Although the company remains in a loss position, the magnitude of the losses decreased significantly from -9288 million USD in 2020 to -1414 million USD in 2024. This trend suggests a gradual improvement in profitability or cost management, reducing the deficit year-over-year.
Invested Capital
Invested capital shows a steady decline from 115,597 million USD in 2020 to 111,328 million USD in 2024. The gradual reduction in invested capital over five years signifies either asset disposals, reduced reinvestments, or a strategic move to optimize capital allocation.
Economic Spread Ratio
The economic spread ratio remains negative through the entire timeline, indicating the company’s return on invested capital (ROIC) is below its cost of capital. However, there is a clear improvement trend from -8.03% in 2020 to -1.27% in 2024. This suggests the gap between ROIC and cost of capital is narrowing, improving the economic value generation but still not reaching positive territory as of the latest period.

Economic Profit Margin

RTX Corp., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1
Net sales
Performance Ratio
Economic profit margin2
Benchmarks
Economic Profit Margin, Competitors3
Boeing Co.
Caterpillar Inc.
Eaton Corp. plc
GE Aerospace
Honeywell International Inc.
Lockheed Martin Corp.

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Economic profit. See details »

2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × ÷ =

3 Click competitor name to see calculations.


Economic Profit
The economic profit demonstrated a negative trend throughout the reported periods, though there was a notable improvement in the overall loss. Starting at -9,288 million US dollars in 2020, the loss reduced significantly to -2,860 million in 2021. However, it increased slightly in 2022 and 2023 to -3,352 and -3,481 million respectively. By 2024, the economic profit loss narrowed again, reaching -1,414 million. This pattern suggests persistent challenges in generating positive economic profit, albeit with some recovery towards the end of the timeframe.
Net Sales
Net sales showed a continuous and steady growth over the five-year period. Beginning at 56,587 million US dollars in 2020, sales increased each year, reaching 64,388 million in 2021, 67,074 million in 2022, 68,920 million in 2023, and experiencing a more pronounced jump to 80,738 million in 2024. This upward trend indicates a strong expansion in revenue generation capabilities.
Economic Profit Margin
The economic profit margin, expressed as a percentage, remained negative throughout the period but showed consistent improvement. Initially, the margin was -16.41% in 2020, improving to -4.44% in 2021. Slight fluctuations occurred in 2022 and 2023 with margins of -5.00% and -5.05% respectively, reflecting a temporary stabilization of losses relative to sales. By 2024, the margin improved significantly to -1.75%, indicating better operational efficiency or cost management relative to net sales. Despite the negative values, the trend points towards a narrowing gap between costs and revenues.