Raytheon Technologies Corporation (NYSE:RTX) has been a defensive stock this year. The stock is up 3.76% year-to-date. The returns were higher when the stock traded at $105 in April, compared to the current $90. Expectations of greater defense spending due to the Ukrainian way boosted the stock.
A critical reflection of Raytheon may suggest that investors could be cautious after the recent highs. The stock’s PEG ratio of 1.99 surpasses an average of 1.89 in the aerospace-defense industry. That suggests an overvaluation, although its closest rival Lockheed Martin has a higher 3.12 ratio.
In earnings, Raytheon reported revenues of $16.31 billion in the second quarter. Although higher than $15.88 billion in the prior year, it missed estimates of $16.61 billion. That illustrates that investors were too optimistic about the revenues. Raytheon still beat on earnings, which came at $1.16, from $1.03 last year. The defense maker reiterated a guidance revenue of between $67.75 billion to $68.75 billion in FY22. The stock is yet to show enthusiasm after Tuesday’s financial release.
Raytheon slipping back to support after Q2 revenue miss
Source – TradingView
Technically, Raytheon is sliding along a bearish trendline. Together with the support at $89, the stock forms a descending triangle. Raytheon will need to hold at $89 and break above the bearish trendline to consider a bull case. Investors should wait before buying the stock as it faces pressure following a revenue miss.
Raytheon Technologies missed revenue estimates in Q2 despite rising from the prior year. The stock is overvalued, although not the highest in the industry. Investors should wait for a potential breakout to determine the price direction.
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