RTX Corp stock (NYSE: RTX), formerly known as Raytheon Technologies, currently trades at $76 per share, about 20% lower than the level seen in early June 2022, just before the Fed started increasing rates, compared to 18% gains for the S&P 500 during this period. This underperformance of RTX stock can primarily be attributed to its recall of over 1,000 Pratt & Whitney engines and associated costs. Also, investors still have concerns about a potential recession despite a steady decline in the inflation rate in response to the Fed’s aggressive rate hike plan.
Interestingly, RTX stock has had a Sharpe Ratio of 0.2 since early 2017, much lower than 0.6 for the S&P 500 Index over the same period. This compares with the Sharpe of 1.3 for the Trefis Reinforced Value portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.
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