Sign InRTX Stock Shows Promise Amidst Geopolitical Impacts and Technical Analysis
Summary
According to a fundamental analysis of Raytheon Technologies Corporation (RTX), the company's positive earnings per share and lower than average price to earnings ratio suggest it may be undervalued; the company's size and scale also contribute to its stability in the market; recent geopolitical circumstances, such as the Israel-Hamas conflict, have resulted in a surge in defense stocks, including RTX; from a technical analysis perspective, RTX's recent closing price and moving averages indicate a downward trend, but indicators such as RSI and MACD suggest it may be nearing oversold territory and undervalued; the ATR hints at potential volatility; analysts have set a range of price targets, with a consensus expectation of a price increase, but the consensus rating is Hold; discounted cash flow analysis suggests that RTX shares could potentially be undervalued; based on recent positive news for the defense industry, it is likely that RTX's stock price may continue to climb in the short-term, with a potential increase to the resistance level; by the end of the next trading week, RTX could potentially reach the DCF value; the final evaluation puts RTX in the Hold category, but if the geopolitical conflict continues, it may become an attractive Buy due to upside
Fundamental Analysis
Raytheon Technologies Corporation (RTX), an aerospace and defense company, presents a number of fundamental factors for consideration. The Earnings Per Share (EPS) of $3.77 suggests that the company is generating a positive net income. Furthermore, the Price to Earnings ratio (PE) of 19.36 is lower than the overall market average, indicating that the company may be undervalued according to this measure.
The current market capitalization is around $106.24 billion with shares outstanding estimated to be 1.46 billion. This demonstrates the company's size and the scale of its operations, which contributes to its overall stability in the market.
The recent geopolitical circumstances having a direct impact on RTX, as the news about the ongoing Israel-Hamas conflict has resulted in a surge in defense stocks. This development has influenced the rise in RTX's shares, demonstrating a close relationship between global geopolitical events and the performance of defense stocks.
Technical Analysis
The RTX's last closing price was $72.99 on October 09, 2023, marking a 4.62% increase with a change of $3.22. The day's trading range was fairly limited, with a low and high price of $71.82 and $73.25 respectively. This suggests moderate volatility.
The 50-day moving average at $80.64 and the 200-day moving average at $93.60 are both significantly higher than the last close. This indicates a recent downward trend.
The RSI14 (Relative Strength Index) stands at 41, suggesting that the stock is nearing oversold territory and may potentially be undervalued. The 3-month MACD (Moving Average Convergence Divergence) of -4.88 also supports this observation of a recent downward trend.
However, the ATR (Average True Range) of 2.24 hints at potential volatility in upcoming trading sessions.
For the upcoming trading day (October 10, 2023), the stop-loss level is set at $69.85, acting as security against any significant downward movement in the stock's price.
Targets and Ratings
Analysts have set a high, low, median, and consensus target of $112, $82, $104.5, and $101.5 respectively. This shows that there's a general expectation of a price increase.
However, the consensus rating is "Hold", with 6 "buy" ratings and 8 "hold" ratings. This indicates that while some analysts see potential for growth, others advocate maintaining current positions.
Discounted Cash Flow Analysis
The Discounted Cash Flow (DCF) at $77.18 suggests that RTX shares could potentially be undervalued, as the DCF is higher than the last closing price.
Prediction and Final Evaluation
Given the recent positive news for the defense industry, it is likely that RTX's stock price may continue to climb. For the next trading day, with the recent increase and a strong likelihood of further geopolitical conflict, RTX could see a price increase to somewhere between $73.25 and $75.56 (the resistance level).
By the end of the next trading week, keeping in mind the analyst targets and other factors at play, RTX could potentially reach around $77, nearing the DCF value.
Our final evaluation of RTX puts it in the "Hold" category, considering the current market conditions, technical aspects, and recent events that influence the defense sector. However, taking into account the geopolitical situation, it may become an attractive "Buy" if the conflict continues. Despite the recent downward trend, there remains upside potential, driven by global events. Therefore, investors should keep a close eye on the stock.
