Critical Analysis: GE Aerospace (NYSE:GE) and RTX (NYSE:RTX)

RTX (NYSE:RTX) and GE Aerospace (NYSE:GE) are both large-cap aerospace companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, dividends, earnings, risk, analyst recommendations, valuation and institutional ownership.

Institutional & Insider Ownership

86.5% of RTX shares are owned by institutional investors. Comparatively, 74.8% of GE Aerospace shares are owned by institutional investors. 0.2% of RTX shares are owned by insiders. Comparatively, 0.2% of GE Aerospace shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

RTX has a beta of 0.44, meaning that its stock price is 56% less volatile than the S&P 500. Comparatively, GE Aerospace has a beta of 1.4, meaning that its stock price is 40% more volatile than the S&P 500.

Profitability

This table compares RTX and GE Aerospace’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RTX	7.67%	13.28%	5.12%
GE Aerospace	18.34%	34.01%	5.26%

Dividends

RTX pays an annual dividend of $2.72 per share and has a dividend yield of 1.5%. GE Aerospace pays an annual dividend of $1.44 per share and has a dividend yield of 0.5%. RTX pays out 55.9% of its earnings in the form of a dividend. GE Aerospace pays out 19.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. RTX has increased its dividend for 5 consecutive years and GE Aerospace has increased its dividend for 2 consecutive years. RTX is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current recommendations and price targets for RTX and GE Aerospace, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RTX	0	5	15	3	2.91
GE Aerospace	2	2	16	0	2.70

RTX currently has a consensus price target of $182.71, indicating a potential upside of 2.30%. GE Aerospace has a consensus price target of $309.94, indicating a potential upside of 3.23%. Given GE Aerospace’s higher probable upside, analysts plainly believe GE Aerospace is more favorable than RTX.

Valuation & Earnings

This table compares RTX and GE Aerospace”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RTX	$80.74 billion	2.97	$4.77 billion	$4.87	36.67
GE Aerospace	$38.70 billion	8.18	$6.56 billion	$7.49	40.08

GE Aerospace has lower revenue, but higher earnings than RTX. RTX is trading at a lower price-to-earnings ratio than GE Aerospace, indicating that it is currently the more affordable of the two stocks.

Summary

GE Aerospace beats RTX on 12 of the 18 factors compared between the two stocks.

About RTX

RTX Corporation, an aerospace and defense company, provides systems and services for the commercial, military, and government customers in the United States and internationally. It operates through three segments: Collins Aerospace, Pratt & Whitney, and Raytheon. The Collins Aerospace Systems segment offers aerospace and defense products, and aftermarket service solutions for civil and military aircraft manufacturers and commercial airlines, as well as regional, business, and general aviation, defense, and commercial space operations. This segment also designs, produces, and supports cabin interior, including oxygen systems, food and beverage preparation, storage and galley systems, and lavatory and wastewater management systems; battlespace, test and training range systems, crew escape systems, and simulation and training solutions; information management services; and aftermarket services that include spare parts, overhaul and repair, engineering and technical support, training and fleet management solutions, and asset and information management services. Its Pratt & Whitney segment supplies aircraft engines for commercial, military, business jet, and general aviation customers; and produces, sells, and services military and commercial auxiliary power units. The Raytheon segment provides defensive and offensive threat detection, tracking, and mitigation capabilities for U.S., foreign government, and commercial customers. The company was formerly known as Raytheon Technologies Corporation and changed its name to RTX Corporation in July 2023. RTX Corporation was incorporated in 1934 and is headquartered in Arlington, Virginia.

About GE Aerospace

GE Aerospace (also known as General Electric) is a company that specializes in providing aerospace products and services. It operates through two reportable segments: Commercial Engines and Services and Defense and Propulsion Technologies. It offers jet and turboprop engines, as well as integrated systems for commercial, military, business, and general aviation aircraft. GE demerged into GE Vernova, GE Aerospace, and GE Healthcare.