RTX
RTX
$194.88
+0.62%
RTX Corporation is a premier aerospace and defense manufacturer formed from the merger of United Technologies and Raytheon, operating through three segments: Collins Aerospace (diversified aerospace supplier), Pratt & Whitney (aircraft engines), and Raytheon (missiles, defense systems, and sensors). As a top-tier defense prime and commercial aerospace supplier, RTX holds a unique dual-market position with roughly equal exposure to both sectors, making it a bellwether for global defense spending and commercial aviation recovery. The current investor narrative centers on record U.S. defense spending of $1.5 trillion in 2027, which is expected to bolster RTX's massive backlog, while geopolitical tensions with Iran and ongoing commercial aerospace recovery provide additional tailwinds. Debate remains around margin expansion potential and the impact of supply chain constraints on Pratt & Whitney's engine deliveries.…
RTX
RTX
$194.88
Related headlines
RTX 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on RTX's 12-month outlook, with a consensus price target around $215.36 and implied upside of +10.5% versus the current price.
Average Target
$215.36
0 analysts
Implied Upside
+10.5%
vs. current price
Analyst Count
—
covering this stock
Price Range
$180 - $242
Analyst target range
RTX is covered by 22 analysts, with a consensus recommendation of 'Buy' (mean rating 1.87 on a 1-5 scale). The average target price is $215.14, implying approximately 11% upside from the current price of $193.51. The distribution leans bullish, with recent upgrades from Jefferies (to Buy) and maintained Overweight ratings from Morgan Stanley and JP Morgan, while UBS remains Neutral. The consensus reflects confidence in RTX's growth trajectory and defense tailwinds. The target range spans from $180.00 (low) to $242.00 (high). The high target assumes successful execution on margin expansion, sustained defense spending growth, and commercial aerospace recovery, potentially driving multiple expansion. The low target prices in risks such as supply chain disruptions, Pratt & Whitney engine issues, or a slowdown in defense budgets. The spread of $62 (34% of the low) indicates moderate uncertainty, but the recent upgrade momentum and strong institutional support suggest conviction in the upside case. The implied upside of 11% to the average target is attractive but not excessive, reflecting a balanced risk-reward profile.
Bulls vs Bears: RTX Investment Factors
RTX presents a balanced risk-reward profile with strong tailwinds from record defense spending and accelerating commercial aerospace recovery. The bull case is supported by accelerating revenue growth (8.7% YoY), margin expansion (operating margin up 160 bps), and a reasonable PEG ratio (0.91). However, the elevated trailing P/E (36.5x vs. industry 22x) and recent price underperformance (-4.2% over six months) highlight valuation risk and near-term uncertainty. The single most important tension is whether the company can deliver the earnings growth implied by the forward P/E (25.5x) — if margins continue to expand and supply chain issues resolve, the stock could re-rate higher; if growth disappoints, the premium could compress significantly. Currently, the bull case has slightly stronger evidence given the fundamental momentum and defense spending backdrop.
Bullish
- Record Defense Spending Tailwind: U.S. defense spending is projected to reach $1.5 trillion in 2027, directly benefiting RTX's massive backlog. As a top defense prime, RTX is well-positioned to capture a significant share of this increased spending, driving revenue growth.
- Accelerating Revenue Growth: Q1 2026 revenue grew 8.7% YoY to $22.08 billion, accelerating from 6.3% in Q4 2025 and 4.7% in Q3 2025. This trend indicates strong momentum across all three segments, with Pratt & Whitney benefiting from higher engine deliveries and aftermarket services.
- Margin Expansion Trajectory: Operating margin improved to 11.6% in Q1 2026 from 10.0% a year ago, while net margin rose to 9.3% from 7.6%. This operational leverage suggests cost controls and scale benefits are materializing, with further upside as supply chain pressures ease.
- Attractive PEG Ratio: With a PEG ratio of 0.91, RTX trades below its earnings growth rate, indicating reasonable valuation relative to expected EPS growth. The forward P/E of 25.5x is closer to the industry average of 22x, suggesting the premium is justified by growth.
Bearish
- Elevated Trailing P/E Premium: The trailing P/E of 36.5x is 66% above the Aerospace & Defense industry average of 22x. This premium implies high expectations for earnings recovery, leaving little room for error if growth disappoints.
- Geopolitical and Supply Chain Risks: Recent U.S.-Iran tensions and potential supply chain disruptions (e.g., reliance on Chinese rare earths for defense systems) could impact production and costs. Pratt & Whitney's engine issues also pose operational risks.
- Recent Price Underperformance: RTX has declined 4.2% over the past six months while the S&P 500 gained 7.5%, indicating relative weakness. The stock sits 9.8% below its 52-week high of $214.50, suggesting a lack of near-term momentum.
- High Debt and Interest Expense: Despite a manageable debt-to-equity ratio of 0.61, interest expense of $406 million in Q1 2026 weighs on net income. Rising interest rates could further pressure earnings if debt refinancing costs increase.
RTX Technical Analysis
RTX is trading in a recovery phase after a sharp correction, with the stock up 27.7% over the past year but down 4.2% over the last six months. The current price of $193.51 sits at 62% of its 52-week range ($143.56–$214.50), indicating it has rebounded from the lows but remains well below the highs. This positioning suggests the stock is in a consolidation zone after a significant pullback, with potential for further upside if it can reclaim the $200 level. Over the past month, RTX has gained 0.5%, while the S&P 500 rose 0.3%, showing slight relative strength. However, the three-month change of -1.5% contrasts with the S&P 500's +4.7%, indicating short-term underperformance. The divergence between the strong one-year trend and recent weakness could signal a temporary pullback within a longer-term uptrend, but the lack of momentum suggests caution. The 52-week low of $143.56 provides strong support, while the 52-week high of $214.50 is a key resistance level. A breakout above $214.50 would signal a resumption of the uptrend, while a breakdown below $180 (near the low end of analyst targets) could indicate further downside. With a beta of 0.30, RTX is significantly less volatile than the market, meaning it offers relative stability but may lag during broad market rallies.
Beta
0.30
0.30x market volatility
Max Drawdown
-19.3%
Largest decline past year
52-Week Range
$149-$215
Price range past year
Annual Return
+30.6%
Cumulative gain past year
| Period | RTX Return | S&P 500 |
|---|---|---|
| 1m | +7.2% | +0.4% |
| 3m | +8.7% | +5.5% |
| 6m | -0.5% | +8.4% |
| 1y | +30.6% | +18.9% |
| ytd | +4.1% | +9.6% |
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RTX Fundamental Analysis
RTX reported Q1 2026 revenue of $22.08 billion, up 8.7% year-over-year, accelerating from the 6.3% growth in Q4 2025 and 4.7% in Q3 2025. The growth is driven by all three segments: Collins Aerospace ($7.60B), Raytheon Intelligence & Space ($6.95B), and Pratt & Whitney ($8.17B), with Pratt benefiting from higher engine deliveries and aftermarket services. The revenue trajectory is solidly positive, supported by record defense budgets and commercial aerospace recovery, reinforcing the investment case for dual-market exposure. Net income in Q1 2026 was $2.06 billion, up from $1.54 billion in Q1 2025, with a net margin of 9.3% versus 7.6% a year ago. Gross margin improved to 20.8% from 20.3% in Q1 2025, while operating margin expanded to 11.6% from 10.0%, reflecting operational leverage and cost controls. The margin expansion is encouraging, though still below the company's historical peaks, and the trajectory suggests further improvement as supply chain pressures ease. RTX generated $8.36 billion in trailing twelve-month free cash flow, with a free cash flow yield of 3.4% based on the current market cap. The debt-to-equity ratio is 0.61, manageable for an industrial company, and the current ratio of 1.03 indicates adequate liquidity. ROE stands at 10.3%, reasonable for the sector, and the company's strong cash generation supports both dividends and organic investment, reducing reliance on external financing.
Quarterly Revenue
$22.1B
2026-03
Revenue YoY Growth
+8.7%
YoY Comparison
Gross Margin
20.8%
Latest Quarter
Free Cash Flow
$8.4B
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, the primary valuation metric is the P/E ratio. The trailing P/E is 36.5x, while the forward P/E is 25.5x, implying the market expects significant earnings growth over the next year. The gap between trailing and forward multiples suggests that current earnings are depressed relative to future expectations, likely due to the recovery from the 2024 GTF engine issue and margin expansion. Compared to the Aerospace & Defense industry average P/E of approximately 22x, RTX trades at a 66% premium on a trailing basis. However, the forward P/E of 25.5x is closer to the industry average, indicating that the premium is justified by expected earnings growth. The PEG ratio of 0.91 suggests the stock is reasonably valued relative to its growth rate, supporting the bull case. Historically, RTX's trailing P/E has ranged from 20x to 47x over the past five years. The current 36.5x is above the midpoint of this range, indicating the market is pricing in optimistic expectations for earnings recovery. However, the forward P/E of 25.5x is near the lower end of the historical range, suggesting that if earnings materialize as expected, the stock could be undervalued. The P/B ratio of 3.77 is above the historical average of ~2.5, reflecting the premium placed on the company's asset base and future growth.
PE
36.5x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 19x~38x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
18.6x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: RTX carries a debt-to-equity ratio of 0.61, which is manageable but not negligible, with quarterly interest expense of $406 million consuming a portion of operating income. The company's net margin of 9.3% is improving but still below historical peaks, and any reversal in margin expansion could pressure earnings. Additionally, the trailing P/E of 36.5x implies high expectations; if earnings fail to meet estimates, the stock could face multiple compression. The reliance on Pratt & Whitney's engine deliveries and aftermarket services introduces operational risk, as supply chain constraints or quality issues could disrupt revenue.
Market & Competitive Risks: RTX trades at a significant premium to the industry average P/E (36.5x vs. 22x), making it vulnerable to valuation compression if growth slows or if sector rotation occurs. The stock's beta of 0.30 indicates low market correlation, but it also means it may underperform during broad market rallies. Geopolitical tensions, such as the recent U.S.-Iran conflict, can boost defense stocks but also introduce uncertainty around supply chains and costs. Competition from other defense primes like Lockheed Martin and Northrop Grumman could pressure margins, while commercial aerospace faces risks from fuel price spikes and airline consolidation.
Worst-Case Scenario: A combination of a sharp defense spending slowdown, a commercial aerospace recession, and operational setbacks (e.g., Pratt & Whitney engine failures) could drive RTX's stock to its 52-week low of $143.56, representing a potential 25.8% decline from the current price of $193.51. In a severe downturn, the stock could fall further, but the 52-week low provides a realistic downside anchor. Historical max drawdown of -19.3% suggests that a 20-25% decline is within the realm of possibility under adverse conditions.