RTX
RTX
$178.11
-0.44%
RTX Corporation is a premier aerospace and defense manufacturer formed from the merger of United Technologies and Raytheon, operating across three core segments: Collins Aerospace (diversified aerospace supplier), Pratt & Whitney (commercial and military aircraft engines), and Raytheon (defense prime contractor for missiles, sensors, and communications). The company is a dominant market leader and a critical supplier to both commercial aerospace and the U.S. defense industrial base, with a massive scale and a balanced portfolio across its segments. The current investor narrative is overwhelmingly driven by geopolitical tensions and proposed massive increases in U.S. defense spending, with recent news highlighting President Trump's push for a $1.5 trillion military budget and the company's central role in missile defense and supply chain reshoring, positioning RTX as a primary beneficiary of a potential multi-year defense upcycle.…
RTX
RTX
$178.11
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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 $231.54 and implied upside of +30.0% versus the current price.
Average Target
$231.54
8 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
8
covering this stock
Price Range
$142 - $232
Analyst target range
Analyst coverage for RTX appears limited in the provided data, with only 8 analysts cited for EPS estimates, and no explicit consensus recommendation or average price target provided in the analyst data object. This suggests that while the company is a large-cap leader, the specific dataset lacks the full suite of analyst targets typically available. The available data shows analysts estimate an average EPS of $9.32 for the coming period, with a range from $9.12 to $9.52, indicating tight clustering and high conviction in near-term earnings. The institutional ratings show a generally bullish stance among covering firms, with recent actions from Citigroup (Buy), RBC Capital (Outperform), and JP Morgan (Overweight) reaffirming positive ratings, though UBS downgraded from Buy to Neutral in January 2026. The pattern suggests overall institutional sentiment is favorable but becoming more selective, with the downgrade potentially reflecting concerns over the recent price run-up or execution risks. The lack of a clear price target range in the data implies investors should rely on the fundamental and valuation analysis, noting that the recent sell-off may have already addressed some overvaluation concerns flagged by the neutral rating.
Bulls vs Bears: RTX Investment Factors
The evidence presents a tense battle between powerful structural tailwinds and concerning near-term technical and fundamental cracks. The bull case, led by robust defense budget proposals and solid revenue growth, currently holds stronger fundamental evidence for the long-term story. However, the bear case has gained significant momentum, evidenced by the severe price breakdown and emerging margin pressure. The single most important tension is whether the recent sell-off is a healthy valuation reset within a sustained multi-year upcycle, or the beginning of a deeper derating due to execution missteps and peak cycle concerns. The resolution of Q4 margin compression in upcoming quarters will be the critical factor determining the thesis direction.
Bullish
- Strong Defense Budget Tailwinds: Recent news highlights a proposed $1.5 trillion U.S. military budget and multi-decade missile defense programs, positioning RTX's Raytheon segment as a primary beneficiary. This structural increase in defense spending provides a multi-year growth runway, directly supporting the 12.09% YoY revenue growth seen in Q4 2025.
- Robust Revenue Growth Trajectory: Q4 2025 revenue of $24.24 billion grew 12.09% YoY, with sequential growth from $20.31B in Q1 2025, indicating steady business acceleration. This growth is diversified across Pratt & Whitney ($17.13B), Collins Aerospace ($15.36B), and Raytheon ($14.66B) segments, reducing single-point dependency.
- Healthy Free Cash Flow Generation: The company generates substantial TTM free cash flow of $7.94 billion, providing strong internal funding for growth, dividends, and debt repayment. This supports financial flexibility and a shareholder-friendly capital allocation policy, evidenced by a payout ratio of 53%.
- Attractive Forward Valuation After Sell-off: The recent 13.41% 3-month price decline has compressed the forward P/E to 23.06x from a trailing P/E of 36.54x, based on estimated EPS of $9.32. A PEG ratio of 0.91 suggests the stock is reasonably valued relative to its expected growth, especially given the strong defense and aerospace backdrop.
Bearish
- Severe Recent Price and Momentum Breakdown: The stock is down 13.41% over 3 months and 10.65% over 1 month, starkly underperforming the SPY by -20.63 in relative strength. This sharp reversal from 52-week highs near $214.50 to $173.99 suggests a breakdown in its defensive characteristics and raises concerns over a deeper correction.
- Quarterly Margin Compression Emerging: Q4 2025 operating margin declined to 9.45% from 10.94% in Q3, while net income fell sequentially from $1.92B to $1.62B. Gross margin of 19.46% also dipped below the TTM average of 20.08%, indicating potential cost pressures or mix issues that could threaten profitability growth.
- Elevated Trailing Valuation Relative to History: The trailing P/E of 36.54x is near the upper end of its recent historical range (low near 19x), indicating the stock had been pricing in peak optimism. The recent sell-off is a correction towards the forward multiple, but the high starting point leaves room for further multiple compression if growth disappoints.
- Geopolitical and Political Headline Risk: Recent news highlights risks such as potential U.S. NATO exit rhetoric and dependence on China for rare earth metals, which could introduce volatility and long-term strategic uncertainty. While budgets are expanding, these factors create execution and supply chain risks not fully priced into the bullish narrative.
RTX Technical Analysis
The stock is in a pronounced downtrend from its recent highs, having experienced a significant correction. Despite a strong 1-year price change of +36.56%, the stock has fallen -13.41% over the last 3 months and -10.65% over the last month, indicating a sharp reversal of momentum. The current price of $173.99 sits at approximately 37% of its 52-week range ($126.03 to $214.50), a substantial retreat from the highs and suggesting the stock is now in a value-seeking zone after a significant pullback, though the risk of further decline remains given the negative momentum. Recent momentum has been decisively negative and diverges sharply from the longer-term uptrend, signaling a potential trend reversal or a deep correction. The 1-month decline of -10.65% starkly contrasts with the SPY's +9.98% gain over the same period, resulting in a severe relative strength reading of -20.63, indicating significant underperformance and a breakdown in the stock's previous defensive characteristics. This divergence suggests the sell-off is company or sector-specific, likely tied to profit-taking or concerns over execution despite the positive macro backdrop. Key technical support is at the 52-week low of $126.03, while immediate resistance is at the recent highs near $214.50. A breakdown below the April low of $172.79 could signal a test of lower support levels, while a recovery above the 200-day moving average (implied by the price data) is needed to stabilize the trend. The stock's beta of 0.428 indicates it has historically been far less volatile than the market, but the recent sharp drop against a rising market highlights an atypical spike in idiosyncratic risk that investors must monitor closely.
Beta
0.30
0.30x market volatility
Max Drawdown
-18.6%
Largest decline past year
52-Week Range
$129-$215
Price range past year
Annual Return
+36.3%
Cumulative gain past year
| Period | RTX Return | S&P 500 |
|---|---|---|
| 1m | -11.6% | +8.2% |
| 3m | -11.4% | +9.0% |
| 6m | +1.4% | +10.5% |
| 1y | +36.3% | +26.5% |
| ytd | -4.9% | +8.9% |
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RTX Fundamental Analysis
Revenue growth remains robust, with Q4 2025 revenue of $24.24 billion representing a 12.09% year-over-year increase. The multi-quarter trend shows consistent sequential growth from $20.31 billion in Q1 2025 to the Q4 figure, indicating a steady acceleration in the business, driven by strong demand across both commercial aerospace recovery and defense spending. Segment data shows a balanced contribution, with Pratt & Whitney at $17.13 billion, Collins Aerospace at $15.36 billion, and Raytheon Intelligence & Space at $14.66 billion for the latest period, underscoring the diversified growth drivers. The company is solidly profitable, with Q4 2025 net income of $1.62 billion and a net margin of 6.69%. Gross margin for the quarter was 19.46%, which is slightly below the trailing twelve-month gross margin of 20.08% indicated in the valuation data, suggesting some potential quarterly pressure. Comparing sequential quarters, Q4 net income of $1.62 billion was down from Q3's $1.92 billion, while the operating margin also dipped to 9.45% from 10.94% in Q3, indicating some margin compression in the most recent period that warrants monitoring. The balance sheet and cash flow position is healthy, with a manageable debt-to-equity ratio of 0.61 and a current ratio of 1.03, indicating adequate short-term liquidity. The company generates substantial free cash flow, with TTM free cash flow of $7.94 billion, providing strong internal funding for growth, dividends, and debt repayment. Return on equity of 10.32% is respectable for a capital-intensive industrial, and the solid free cash flow yield supports the company's financial flexibility and shareholder returns.
Quarterly Revenue
$24.2B
2025-12
Revenue YoY Growth
+0.12%
YoY Comparison
Gross Margin
+0.19%
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?
Given the positive net income, the primary valuation metric is the P/E ratio. The trailing P/E is 36.54x, while the forward P/E is 23.06x, based on estimated EPS of $9.32. The significant gap between trailing and forward multiples implies the market expects strong earnings growth to materialize, with forward earnings projected to be substantially higher than the trailing twelve-month figure, justifying the lower forward multiple. Compared to sector averages, RTX's trailing P/E of 36.54x appears elevated relative to typical industrials, but this premium is likely justified by its dual exposure to the resilient defense budget cycle and the recovering commercial aerospace sector, coupled with its market-leading positions. The forward P/E of 23.06x is more in line with growth expectations, and the PEG ratio of 0.91 suggests the stock may be reasonably valued relative to its growth trajectory. Historically, the stock's own trailing P/E has fluctuated significantly, from a low near 19x in early 2024 to a high over 38x in late 2025. The current trailing P/E of 36.54x is near the upper end of this recent historical range, indicating the market had been pricing in very optimistic expectations prior to the recent sell-off. The compression towards the forward multiple suggests the recent price decline is adjusting valuations to more normalized levels based on future earnings, moving away from peak optimism.
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
21.6x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: RTX faces risks from recent margin compression, with Q4 operating margin dropping 149 bps sequentially to 9.45% and net income falling 15.6% quarter-over-quarter. While revenue growth is robust at 12.09% YoY, this margin pressure could indicate rising costs or unfavorable product mix that may persist. The company carries a debt-to-equity ratio of 0.61, which is manageable but requires consistent free cash flow generation ($7.94B TTM) to service. Earnings visibility is also somewhat volatile, as seen in the significant swing from a 0.08 EPS in Q2 2024 to 1.43 in Q3 2025, though this has since moderated.
Market & Competitive Risks: The stock's primary market risk is valuation compression, given its elevated trailing P/E of 36.54x trading near historical highs. A shift from 'growth-at-a-reasonable-price' to pure value investing could compress this multiple further. The stock's low beta of 0.428 suggests it should be less volatile than the market, but the recent -20.63 relative strength underperformance indicates high idiosyncratic risk. Competitive risks include potential disruption from non-traditional defense firms (like SpaceX) mentioned in recent missile shield news, and regulatory/supply chain risks from China's control of rare earth metals critical for defense manufacturing.
Worst-Case Scenario: The worst-case scenario involves a combination of failed margin recovery, defense budget delays or cuts due to political shifts, and a broader market downturn compressing growth multiples. This could trigger a re-rating to its historical P/E low near 19x. Applying that to estimated forward EPS of $9.32 implies a price near $177, but a deeper earnings miss could drive the stock toward its 52-week low of $126.03. From the current price of $173.99, this represents a potential downside of approximately -28% to the 52-week low. The chain would likely start with a Q1 2026 earnings miss on margins, followed by analyst downgrades and institutional selling.