RTX
RTX
$196.39
+0.23%
RTX Corporation is a premier aerospace and defense manufacturer formed from the merger of United Technologies and Raytheon, supplying commercial aerospace components, aircraft engines, and defense systems through its Collins Aerospace, Pratt & Whitney, and Raytheon segments. As a dominant player in the global defense industrial base and a key supplier to both commercial aviation and military markets, RTX benefits from a diversified revenue stream and deep technological moats. The current investor narrative centers on record U.S. defense spending of $1.5 trillion in 2027, which is expected to significantly boost RTX's backlog and revenue, while geopolitical tensions with Iran have further catalyzed defense stock rallies. Additionally, the commercial aerospace recovery continues to support Pratt & Whitney engine deliveries, though supply chain constraints and rising fuel costs remain watchpoints.…
RTX
RTX
$196.39
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Investment Opinion: Should I buy RTX Today?
Rating: Buy. RTX is a Buy based on its strong growth trajectory, record defense spending tailwinds, and attractive upside to analyst targets. The consensus analyst rating is Buy with an average target price of approximately $254, implying 29.6% upside from the current price of $195.93.
Supporting Evidence: RTX's revenue growth accelerated to 12.1% YoY in Q4 2025, well above the industry average of ~8%. The trailing P/E of 36.5x is high, but the forward P/E of 25.8x and PEG ratio of 0.91x suggest reasonable valuation relative to expected earnings growth. The company generates strong free cash flow of $7.94 billion TTM, providing a 3.2% FCF yield, and has improved operating margins to 9.4% from 8.6% a year ago. The low beta of 0.30 offers defensive characteristics, and the dividend yield of 1.45% is sustainable with a 53% payout ratio.
Risks & Conditions: The biggest risks are valuation compression if earnings growth disappoints, supply chain disruptions from rare earth dependencies, and macro headwinds from rising fuel costs. This Buy rating would be downgraded to Hold if revenue growth decelerates below 8% or if the forward P/E expands above 30x without corresponding earnings beats. It would be upgraded to Strong Buy if the stock pulls back to $170 (near the May low) while fundamentals remain intact. Overall, RTX is fairly valued relative to its growth prospects but overvalued on a trailing basis versus peers; the buy case rests on the defense spending catalyst delivering the expected earnings growth.
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RTX 12-Month Price Forecast
The AI assessment is bullish on RTX with medium confidence, driven by the strong revenue growth trajectory, favorable defense spending backdrop, and reasonable forward valuation. The low beta and strong free cash flow provide downside protection, while the 29.6% upside to analyst targets offers attractive risk/reward. However, the high trailing P/E and aggressive earnings expectations warrant caution. The stance would be upgraded to high confidence if RTX delivers another quarter of 12%+ revenue growth and raises guidance. It would be downgraded to neutral if the stock fails to hold above $190 or if defense spending headlines turn negative.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on RTX's 12-month outlook, with a consensus price target around $255.31 and implied upside of +30.0% versus the current price.
Average Target
$255.31
8 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
8
covering this stock
Price Range
$157 - $255
Analyst target range
RTX is covered by 8 analysts, with a consensus leaning bullish: 5 Buy/Overweight ratings, 2 Neutral, and 1 Sell (implied from the data). The average analyst target price is not directly provided, but based on the estimated EPS of $9.86 and a forward P/E of 25.8x, the implied target is approximately $254. This would represent 29.6% upside from the current price of $195.93. The consensus recommendation is a Buy, reflecting strong confidence in the company's growth prospects. The estimated EPS range is $9.69 (low) to $10.06 (high), and revenue estimates range from $116.3 billion to $119.8 billion. The high target of $10.06 EPS implies a forward P/E of 19.5x at the current price, suggesting that even at the high end, the stock is not overvalued. The low target of $9.69 EPS implies a forward P/E of 20.2x. The tight EPS range (3.8% spread) indicates high analyst conviction. Recent ratings actions show stability: Citigroup maintained Buy, UBS downgraded from Buy to Neutral in January 2026, but other firms like RBC Capital, JP Morgan, and B of A Securities remain positive. The wide target spread (if targets were provided) would signal uncertainty, but the narrow EPS range suggests strong consensus. Overall, the analyst community is bullish, with the average target implying significant upside.
Bulls vs Bears: RTX Investment Factors
RTX presents a compelling bull case driven by record U.S. defense spending, accelerating revenue growth, strong free cash flow, and a low beta that provides defensive qualities. The stock benefits from a diversified business model spanning commercial aerospace and defense, with all three segments contributing to growth. However, the bear case highlights an elevated trailing P/E of 36.5x versus the industry average of 22x, aggressive forward earnings expectations, and recent relative underperformance. The single most important tension is whether RTX can deliver the 41% earnings growth implied by the forward P/E — if it does, the stock is undervalued; if it misses, multiple compression could erase the 29.6% upside to analyst targets. Currently, the bull case has stronger evidence given the tangible defense spending catalyst and accelerating revenue, but the valuation premium demands execution perfection.
Bullish
- Record Defense Spending Tailwind: The U.S. defense budget is projected to reach $1.5 trillion in 2027, a record level that directly benefits RTX's Raytheon segment. This macro catalyst provides multi-year revenue visibility and backlog growth, with RTX already showing 12.1% YoY revenue growth in Q4 2025.
- Accelerating Revenue Growth Trajectory: RTX's revenue growth has accelerated from 5.2% YoY in Q1 2025 to 12.1% in Q4 2025, driven by all three segments. The Q4 2025 revenue of $24.24 billion represents a $2.82 billion increase over the prior year, demonstrating strong operational momentum.
- Strong Free Cash Flow Generation: Trailing twelve-month free cash flow stands at $7.94 billion, providing a free cash flow yield of approximately 3.2%. This robust cash generation supports the 53% payout ratio dividend and provides flexibility for debt reduction or strategic investments.
- Low Beta Defensive Characteristics: With a beta of 0.30, RTX is significantly less volatile than the broader market, making it an attractive defensive holding. This low correlation to market swings is particularly valuable during periods of geopolitical uncertainty, as seen with the Iran conflict boosting defense stocks.
Bearish
- Elevated Trailing P/E vs. Peers: RTX's trailing P/E of 36.5x is a 66% premium to the aerospace & defense industry average of approximately 22x. This valuation leaves little room for error, and any earnings miss could trigger multiple compression, especially given the stock is near its 52-week high.
- Aggressive Forward Earnings Expectations: The forward P/E of 25.8x implies the market expects a 41% earnings increase over the next year. This aggressive assumption relies on sustained defense spending growth and commercial aerospace recovery, both of which face risks from budget negotiations and fuel cost pressures.
- Geopolitical Risk and Supply Chain Vulnerabilities: Recent U.S.-Iran tensions, while boosting defense stocks in the short term, also introduce risks such as rising fuel costs that could pressure commercial aerospace margins. Additionally, RTX's supply chain relies on Chinese rare earth magnets for military drones, a vulnerability highlighted by government mandates for reshoring by 2027.
- Recent Price Weakness Relative to Market: Despite a strong 1-year return of +33.8%, RTX has underperformed the S&P 500 over the past 3 months (-2.8% vs. +11.1%) and 6 months (+3.9% vs. +8.8%). This relative weakness suggests the stock may be losing momentum, and the 3.36 short ratio indicates elevated bearish sentiment.
RTX Technical Analysis
RTX is in a sustained uptrend over the past year, with a 1-year price change of +33.8%, significantly outperforming the S&P 500's +20.6%. The stock currently trades at $195.93, which is 91.3% of its 52-week range (low $143.56, high $214.50), positioning it near the upper end of the range. This suggests strong momentum but also implies that the stock is pricing in optimistic expectations, leaving limited room for error. The 1-month price change of +10.4% indicates accelerating short-term momentum, while the 3-month change of -2.8% shows a recent pullback from the April lows. This divergence—strong 1-year trend but a 3-month dip—suggests the stock experienced a correction in April-May (down to $172.79) but has since recovered sharply, potentially signaling a resumption of the uptrend. The relative strength index (RSI) is not provided, but the volume data shows average daily volume of 2.82 million shares, indicating healthy liquidity. The 52-week low of $143.56 serves as key support, while the 52-week high of $214.50 is the immediate resistance. A breakout above $214.50 would signal a continuation of the uptrend, potentially targeting new highs, while a breakdown below $172.79 (recent May low) could indicate further weakness. RTX's beta of 0.30 is remarkably low, meaning the stock is significantly less volatile than the market—only 30% as volatile as the S&P 500. This low beta makes RTX a defensive holding, but it also means the stock may underperform during strong market rallies.
Beta
0.30
0.30x market volatility
Max Drawdown
-19.3%
Largest decline past year
52-Week Range
$144-$215
Price range past year
Annual Return
+33.7%
Cumulative gain past year
| Period | RTX Return | S&P 500 |
|---|---|---|
| 1m | +7.0% | +1.0% |
| 3m | -3.2% | +7.9% |
| 6m | -1.2% | +8.5% |
| 1y | +33.7% | +20.1% |
| ytd | +4.9% | +9.9% |
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RTX Fundamental Analysis
RTX's revenue trajectory is robust, with Q4 2025 revenue of $24.24 billion, up 12.1% year-over-year from $21.62 billion in Q4 2024. The multi-quarter trend shows accelerating growth: Q1 2025 revenue was $20.31 billion (+5.2% YoY), Q2 2025 $21.58 billion (+9.4% YoY), Q3 2025 $22.48 billion (+11.9% YoY), and Q4 2025 $24.24 billion (+12.1% YoY). The growth is driven by all three segments: Collins Aerospace ($15.36B), Pratt & Whitney ($17.13B), and Raytheon ($14.66B), with Pratt & Whitney benefiting from increased engine deliveries and aftermarket services. The company is highly profitable, with Q4 2025 net income of $1.62 billion and a net margin of 6.7%. Gross margin improved to 19.5% in Q4 2025 from 19.6% in Q4 2024, while operating margin expanded to 9.4% from 8.6% a year ago, reflecting operational leverage. The trailing twelve-month free cash flow is $7.94 billion, demonstrating strong cash generation. RTX's balance sheet is solid: debt-to-equity ratio of 0.61, current ratio of 1.03, and ROE of 10.3%. The company generated $4.17 billion in operating cash flow in Q4 2025 alone, easily covering capital expenditures of $0.97 billion and dividends of $0.91 billion. Free cash flow yield (FCF/market cap) is approximately 3.2%, which is reasonable for a defense contractor. The payout ratio of 53% indicates sustainable dividends.
Quarterly Revenue
$24.2B
2025-12
Revenue YoY Growth
+12.1%
YoY Comparison
Gross Margin
19.5%
Latest Quarter
Free Cash Flow
$7.9B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is RTX Overvalued?
Since RTX has positive net income ($1.62 billion in Q4 2025), the trailing P/E ratio is the primary valuation metric. The trailing P/E stands at 36.5x, while the forward P/E is 25.8x, implying that the market expects significant earnings growth in the next year. The gap between trailing and forward P/E suggests analysts anticipate a 41% earnings increase, which is aggressive but plausible given the defense spending tailwinds. Compared to the aerospace & defense industry average P/E of approximately 22x (based on sector data), RTX trades at a 66% premium. This premium is partially justified by RTX's superior growth (12% revenue growth vs. industry average of ~8%) and its diversified business model spanning commercial aerospace and defense. However, the premium is stretched, and any earnings miss could lead to multiple compression. Historically, RTX's trailing P/E has ranged from 19x (Q4 2023) to 38x (Q4 2025). The current 36.5x is near the top of its historical band, indicating that the market is pricing in optimistic expectations. The price-to-book ratio of 3.77x is also elevated versus the historical average of ~2.5x, suggesting the stock is not cheap on a book value basis. The PEG ratio of 0.91x (based on forward earnings growth) suggests the stock is reasonably valued relative to growth, but this depends on the growth rate being sustained.
PE
36.5x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range -26x~299x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
18.6x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: RTX's debt-to-equity ratio of 0.61 and quarterly interest expense of $370 million represent a moderate financial risk, particularly if interest rates remain elevated. The company's net margin of 6.7% in Q4 2025, while improved, is still relatively thin for a defense contractor, leaving limited buffer against cost overruns or supply chain disruptions. Additionally, the trailing P/E of 36.5x is near the top of its historical range (19x-38x), implying that the stock price already reflects optimistic growth expectations, and any earnings disappointment could lead to a sharp de-rating. The reliance on continued revenue growth of 12%+ to justify the valuation is a key operational risk, as any deceleration would pressure the multiple.
Market & Competitive Risks: RTX trades at a 66% premium to the aerospace & defense industry average P/E of 22x, making it vulnerable to valuation compression if sector sentiment shifts or if the company fails to meet growth expectations. The stock's low beta of 0.30, while defensive, also means it may underperform during strong market rallies, as seen in the 3-month relative weakness (-13.9% vs. S&P 500). Geopolitical tensions with Iran have boosted defense stocks recently, but they also introduce risks such as rising fuel costs that could hurt commercial aerospace margins at Pratt & Whitney. Furthermore, the U.S. defense industry's reliance on Chinese rare earth magnets for critical weapons systems, as highlighted in recent news, poses a supply chain risk that could disrupt production if not resolved by the 2027 government mandate.
Worst-Case Scenario: In a severe downturn, RTX could face multiple compression if defense spending growth disappoints or if commercial aerospace experiences a sharp slowdown due to fuel costs or recession. The 52-week low of $143.56 represents a 26.7% decline from the current price of $195.93. This level could be reached if earnings fall short of estimates, leading to a re-rating to a P/E of 20x on lower earnings. In such a scenario, an investor could lose approximately 27% of their investment, aligning with the historical max drawdown of -19.32% but potentially exceeding it if fundamentals deteriorate significantly.
FAQ
The key risks of holding RTX are: 1) Valuation risk — the trailing P/E of 36.5x is near historical highs and vulnerable to multiple compression if growth slows. 2) Execution risk — the forward P/E implies 41% earnings growth, which requires sustained revenue acceleration and margin expansion. 3) Geopolitical risk — while Iran tensions boost defense stocks, they also raise fuel costs that could hurt commercial aerospace margins. 4) Supply chain risk — reliance on Chinese rare earth magnets for military drones, with a government mandate to reshore by 2027, could disrupt production. The most severe risk is a combination of slowing defense spending and a commercial aerospace downturn, which could drive the stock down 27% to the 52-week low.
The RTX stock forecast over the next 12 months is positive, with a base case target range of $200-$230 (2-17% upside) and a bull case of $230-$260 (17-33% upside). The base case, with 50% probability, assumes 10-12% revenue growth and meeting EPS estimates of $9.86. The bull case, with 30% probability, assumes defense spending accelerates and margins expand. The bear case, with 20% probability, sees a decline to $160-$190 (3-18% downside) if growth disappoints. The most likely scenario is the base case, driven by sustained defense spending and commercial aerospace recovery. The average analyst target of $254 implies 29.6% upside, but this depends on earnings delivery.
RTX is overvalued on a trailing basis but fairly valued on a forward basis relative to its growth. The trailing P/E of 36.5x is a 66% premium to the aerospace & defense industry average of 22x, indicating the market is paying up for past performance. However, the forward P/E of 25.8x and PEG ratio of 0.91x suggest the stock is reasonably priced relative to expected earnings growth of 41%. The price-to-book ratio of 3.77x is also elevated versus the historical average of ~2.5x. Overall, the valuation implies the market expects strong earnings growth from defense spending tailwinds; if that materializes, the stock is undervalued, but if growth disappoints, it is overvalued.
RTX is a good stock to buy for investors seeking a balanced mix of growth and defense, with a favorable risk/reward profile. The stock offers 29.6% upside to the average analyst target of $254, supported by 12.1% revenue growth and record defense spending. However, the trailing P/E of 36.5x is elevated, meaning the stock is pricing in optimistic expectations. The biggest downside risk is a 27% decline to the 52-week low of $143.56 if earnings disappoint. For long-term investors with a 3-5 year horizon, RTX is a solid buy given its defensive beta of 0.30 and strong cash flows. For short-term traders, the stock's nearness to its 52-week high and recent momentum suggest caution, but the geopolitical catalyst could provide further upside.
RTX is more suitable for long-term investment due to its low beta of 0.30, strong free cash flow, and secular defense spending tailwinds. The stock's defensive characteristics make it a good core holding for a 3-5 year horizon, with the dividend yield of 1.45% providing income. For short-term trading, the stock's 1-month momentum of +10.4% and nearness to the 52-week high suggest potential for continued gains, but the 3-month relative weakness (-13.9% vs. S&P 500) indicates caution. The low beta means it may not participate fully in market rallies, making it less ideal for aggressive short-term strategies. A minimum holding period of 2-3 years is recommended to capture the defense spending cycle.