RTX Corp. (NYSE:RTX)

Return on Assets (ROA)

The Return on Assets demonstrates a notable improvement over the observed period. Beginning with a negative value of -2.17% in 2020, it transitioned into positive territory by 2021 at 2.39%. The ratio peaked at 3.27% in 2022 before experiencing a temporary decline to 1.97% in 2023. By 2024, ROA recovered to 2.93%. This pattern indicates an overall enhancement in asset efficiency, despite some fluctuations between 2022 and 2023.

Financial Leverage

Financial Leverage remained relatively stable for the initial three years, displaying a slight downward trend from 2.25 in 2020 to 2.19 in 2022. However, a significant increase occurred in 2023, rising to 2.71, and this elevated level was maintained in 2024. The increase in leverage may imply a greater reliance on debt financing or higher risk exposure starting from 2023.

Return on Equity (ROE)

Return on Equity experienced a recovery analogous to that of ROA over the period. Initially showing a negative -4.88% in 2020, ROE increased substantially to 5.29% in 2021 and continued rising to 7.16% by 2022. A decline to 5.34% was observed in 2023, followed by a significant rebound to 7.94% in 2024. This trend suggests improving profitability for shareholders with some variability in the mid-term.

Overall Insights

The analysis reveals a general trend of financial improvement from 2020 through 2024, with positive shifts in both ROA and ROE, indicating enhanced operational efficiency and profitability. The increase in financial leverage from 2023 onwards suggests a strategic shift in capitalization, potentially leveraging debt to drive growth. The dip in both profitability metrics in 2023 may be linked to this change in leverage, warranting closer monitoring of risk and return balance moving forward.

Net Profit Margin

The net profit margin showed a significant improvement starting from a negative value of -6.22% in 2020 to a positive 6% in 2021. It continued to rise to 7.75% in 2022, then dipped to 4.64% in 2023 before recovering to 5.91% in 2024. This indicates enhanced profitability overall, despite some fluctuations in the latter years.

Asset Turnover

The asset turnover ratio displayed a steady upward trend from 0.35 in 2020 to 0.5 in 2024. This suggests an increasing efficiency in utilizing assets to generate revenue over the period analyzed.

Financial Leverage

Financial leverage remained relatively stable between 2.25 and 2.19 from 2020 through 2022, followed by a notable increase to 2.71 in 2023, which was sustained in 2024. This may reflect a deliberate shift towards higher reliance on debt financing or other liabilities during the most recent years.

Return on Equity (ROE)

ROE mirrored the pattern observed in net profit margin, starting from a negative -4.88% in 2020 and improving to 5.29% in 2021. It increased further to 7.16% in 2022, then decreased to 5.34% in 2023 before ascending again to 7.94% in 2024. The return indicates better shareholder value creation, though with some volatility.

The financial data reveals several notable trends over the five-year period ending December 31, 2024. Most key ratios indicate a pattern of improvement with some fluctuations that merit attention.

Tax Burden

The tax burden ratio shows an initial increase from 0.83 in 2021 to 0.88 in 2022 and remains stable in 2023 before declining to 0.8 in 2024. This suggests a modest reduction in the effective tax rate toward the end of the period.

Interest Burden

The interest burden ratio experienced an increase from 0.78 in 2021 to a peak of 0.82 in 2022, followed by a significant decline to 0.69 in 2023. However, it recovered to 0.75 in 2024. This pattern indicates variability in the company's interest expenses relative to its earnings before interest and taxes, with some pressure evident in 2023.

EBIT Margin

Starting from a negative margin of -2.68% in 2020, the EBIT margin exhibited strong growth to 9.29% in 2021 and further improvement to 10.73% in 2022. A dip to 7.7% occurred in 2023, followed by a recovery to 9.82% in 2024. Overall, the margin reflects improved operational profitability despite the temporary setback in 2023.

Asset Turnover

The asset turnover ratio increased steadily from 0.35 in 2020 to 0.5 in 2024. This steady rise indicates enhanced efficiency in using assets to generate revenue across the period.

Financial Leverage

Financial leverage decreased slightly from 2.25 in 2020 to 2.19 in 2022, then increased sharply to 2.71 in both 2023 and 2024. The increase in leverage suggests a higher reliance on debt financing or other liabilities in the most recent years, which could have implications for financial risk.

Return on Equity (ROE)

ROE moved from negative territory in 2020 (-4.88%) into positive figures, increasing to 5.29% in 2021 and peaking at 7.16% in 2022. There was a decline to 5.34% in 2023 before rebounding to 7.94% in 2024. The upward trajectory overall signifies improving profitability relative to shareholders' equity, despite some volatility.

In summary, operational profitability and asset efficiency have improved significantly since 2020, contributing to better returns on equity. However, the increased financial leverage in the latter years introduces higher financial risk, which coincided with fluctuations in interest burden and profitability in 2023. The reduction in tax burden ratio in 2024 may have contributed positively to net earnings. Close monitoring of leverage and interest expenses is advisable to sustain profitability gains.

Net Profit Margin

The net profit margin exhibited a significant improvement from -6.22% in 2020 to a positive 6% in 2021, indicating a turnaround from a loss to profitability. This upward trend continued, reaching 7.75% in 2022, the highest within the observed period. However, a decline followed in 2023 to 4.64%, though the margin recovered slightly to 5.91% in 2024. Overall, the net profit margin demonstrates recovery and growth despite some volatility post-2022 peak.

Asset Turnover

Asset turnover showed a steady upward trajectory over the five years, beginning at 0.35 in 2020 and increasing incrementally each year. By 2024, the ratio reached 0.5, indicating improved efficiency in the utilization of assets to generate sales. The consistent increase suggests enhanced operational effectiveness or better management of asset base.

Return on Assets (ROA)

ROA mirrored the pattern observed in profit margin, moving from a negative position of -2.17% in 2020 to positive territory at 2.39% in 2021. It peaked at 3.27% in 2022, then declined substantially to 1.97% in 2023 before partially rebounding to 2.93% in 2024. Despite fluctuations, the overall shift from negative to positive ROA reflects improved asset profitability and financial health over the period.

Tax Burden

The tax burden ratio demonstrates an upward trend from 0.83 in 2021 to 0.88 in 2022 and 2023, followed by a decline to 0.80 in 2024. This indicates that the effective tax rate increased initially but decreased in the latest year observed.

Interest Burden

The interest burden ratio shows variability over the period. It increased from 0.78 in 2021 to 0.82 in 2022, then declined notably to 0.69 in 2023 before rising again to 0.75 in 2024. This fluctuation suggests changes in interest expense relative to earnings before interest and taxes across the years.

EBIT Margin

The EBIT margin experienced significant improvement from a negative position at -2.68% in 2020 to positive margins subsequently. It rose sharply to 9.29% in 2021 and further increased to 10.73% in 2022. However, it declined to 7.7% in 2023 before recovering to 9.82% in 2024, reflecting some volatility but generally indicating improved operational profitability over the period.

Asset Turnover

The asset turnover ratio steadily improved from 0.35 in 2020 to 0.40 in 2021, then progressively rose to 0.42 in 2022, 0.43 in 2023, and 0.50 in 2024. This consistent upward trend indicates enhanced efficiency in generating sales from assets.

Return on Assets (ROA)

ROA moved from a negative -2.17% in 2020 to positive returns in subsequent years, reaching 2.39% in 2021 and 3.27% in 2022. It then declined to 1.97% in 2023 but improved again to 2.93% in 2024. Despite fluctuations, the general pattern suggests recovery and moderate profitability with respect to asset utilization.

Tax Burden

The tax burden ratio shows a generally stable pattern from 2021 to 2023, maintaining levels around 0.83 to 0.88, indicating consistent tax expenses relative to pre-tax earnings. However, in 2024, there is a notable decrease to 0.80, suggesting a slight reduction in tax pressure or improved tax efficiency compared to previous years.

Interest Burden

The interest burden ratio reveals some volatility over the observed period. It increased from 0.78 in 2021 to 0.82 in 2022, implying relatively higher earnings before interest expenses. Yet, it declined significantly to 0.69 in 2023, before partially recovering to 0.75 in 2024. This fluctuation may reflect changes in interest expenses, debt levels, or operational efficiency affecting earnings prior to interest costs.

EBIT Margin

The EBIT margin experienced a dramatic improvement from a negative value of -2.68% in 2020 to positive double-digit figures in the following years, indicating a turnaround in operational profitability. After a peak of 10.73% in 2022, the margin declined to 7.7% in 2023 but rebounded to 9.82% in 2024. This suggests operational performance remains profitable but somewhat variable, potentially influenced by market conditions or cost management.

Net Profit Margin

The net profit margin follows a similar trajectory to the EBIT margin, moving from a negative -6.22% in 2020 to positive territory thereafter. The peak at 7.75% in 2022 was followed by a decline to 4.64% in 2023 and a partial recovery to 5.91% in 2024. These fluctuations highlight variability in overall profitability, likely impacted by operational efficiency, tax burden changes, and interest expenses.