RTX
RTX
$184.68
-0.18%
RTX Corporation is a diversified aerospace and defense manufacturer built from the merger of United Technologies and Raytheon, operating through three roughly equal segments: Collins Aerospace (avionics, interiors, and aftermarket systems), Pratt & Whitney (commercial and military aircraft engines), and Raytheon (missiles, missile defense, sensors, and communications hardware sold primarily to the U.S. military and allied governments). As one of the few true primes with balanced exposure to both commercial aerospace aftermarket and defense budgets, RTX occupies a distinct position as a platform-scale supplier whose fortunes are tied to global flight hours and geopolitical defense spending rather than a single program or customer. The current investor narrative centers on the company's roughly $289 billion backlog, which provides multi-year revenue visibility across both defense and commercial channels, and on whether management can convert that backlog into margin expansion after several years of Pratt & Whitney GTF engine inspection and remediation costs weighed on profitability. Recent headlines highlight the Trump administration's JATM missile procurement deal as a tailwind for missile-defense primes, while competitive commentary from peers such as GE Aerospace has sharpened the debate over who is capturing the strongest commercial engine and aftermarket economics. With 22 analysts covering the name and a consensus buy rating, the debate has shifted from balance-sheet repair toward execution on margins, free cash flow conversion, and capital returns.…
RTX
RTX
$184.68
Related headlines
Investment Opinion: Should I buy RTX Today?
Synthesized recommendation: Buy. The core thesis is that RTX offers a compelling risk/reward at current levels, with a 23.8% upside to the analyst average target of $234.41 and a PEG ratio of 0.91 that suggests undervaluation relative to growth. The consensus rating of Buy (mean 1.87) from 22 analysts reinforces this view, and the recent pullback has created an attractive entry point for long-term investors.
Supporting evidence includes: 1) Revenue growth of 8.72% YoY in Q1 2026, driven by a balanced segment mix and a $289 billion backlog; 2) Improving profitability, with net margin expanding to 9.33% from 7.56% a year ago and operating margin at 11.57%; 3) Strong free cash flow of $8.359 billion TTM, supporting a sustainable 1.45% dividend yield and debt reduction; 4) Forward PE of 24.12x, which is below the trailing PE of 36.53x and implies a 51% earnings recovery, making the valuation reasonable for a large-cap industrial with mid-single-digit growth. Compared to the broader industrials sector, RTX's EV/EBITDA of 18.61x is a premium, but the PEG ratio and backlog visibility justify it.
The biggest risks that could invalidate the thesis are: 1) A failure to sustain margin expansion, which would make the premium valuation unsustainable; 2) Competitive pressure from GE Aerospace eroding Pratt & Whitney's aftermarket share; 3) A deterioration in defense spending or a major GTF cost overrun. The rating would upgrade to a Strong Buy if the forward PE compresses below 20x or if revenue growth accelerates above 10%. It would downgrade to Hold if net margin fails to hold above 9% or if the stock breaks below the 52-week low of $155.64. Relative to its own history, RTX is fairly valued to slightly undervalued on a forward basis, but the trailing PE near historical highs suggests the market is pricing in optimistic expectations. Overall, the stock is a Buy for investors with a medium to long-term horizon who can tolerate near-term volatility.
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RTX 12-Month Price Forecast
RTX presents a balanced risk/reward with a bullish tilt, supported by its massive backlog, improving margins, and attractive forward valuation. The recent 10.66% monthly decline has created a buying opportunity, as the stock now trades at a 23.8% discount to the analyst average target. However, the premium EV/EBITDA of 18.61x and competitive threats from GE Aerospace warrant caution. The base case (55% probability) sees the stock reaching $234.41, while the bear case (20%) could see a retest of $155.64. I would upgrade to high confidence if Q2 2026 earnings show net margin above 10% and free cash flow exceeds $2.5 billion. I would downgrade to neutral if the stock breaks below $170 or if revenue growth decelerates below 5%.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on RTX's 12-month outlook, with a consensus price target around $234.14 and implied upside of +26.8% versus the current price.
Average Target
$234.14
0 analysts
Implied Upside
+26.8%
vs. current price
Analyst Count
—
covering this stock
Price Range
$200 - $265
Analyst target range
RTX is covered by 22 analysts with a consensus recommendation of buy and a recommendation mean of 1.87 (where 1.0 is a strong buy and 5.0 is a strong sell), indicating a moderately bullish stance. The average target price is $234.41, which implies roughly 23.8% upside from the current price of $189.40, a substantial gap that suggests analysts see meaningful value despite the recent pullback. The estimated EPS average of $10.47 for the forward period, against a trailing EPS of just $0.0274, implies analysts expect a dramatic earnings recovery, and the estimated revenue average of $121.70 billion suggests roughly 8% to 10% top-line growth. The consensus is clearly bullish, but the recent price action, down 10.66% over the past month, has created a wide gap between where the stock trades and where analysts think it should trade, which could signal either a buying opportunity or that analysts are behind the curve on deteriorating fundamentals. The target range spans from a low of $200.00 to a high of $265.00, a spread of $65.00 or roughly 32.5% of the average target, which signals moderate uncertainty but not extreme disagreement. The low target of $200.00 implies just 5.6% upside and likely assumes modest margin expansion, stable defense budgets, and no major GTF cost surprises, essentially a base-case scenario where RTX executes in line with expectations. The high target of $265.00 implies 39.9% upside and likely assumes accelerating margin recovery, successful GTF remediation, strong defense order flow from programs like JATM, and multiple expansion as the market re-rates RTX toward premium aerospace peers. Institutional ratings show a constructive but not uniformly bullish pattern: Jefferies upgraded RTX from Hold to Buy on June 4, 2026, while Morgan Stanley, Citigroup, JP Morgan, and RBC Capital have maintained buy-equivalent ratings through 2026, and UBS has stayed Neutral, reflecting some caution on valuation. The upgrade from Jefferies is a positive signal that at least one major firm sees the risk-reward improving after the recent pullback, and the absence of downgrades in 2026 suggests the analyst community is not yet capitulating on the story. The wide target spread and the mix of Buy and Neutral ratings indicate that conviction is moderate rather than high, which is typical for a large-cap defense prime with a complex turnaround narrative and significant exposure to both commercial aerospace cycles and geopolitical defense spending.
Bulls vs Bears: RTX Investment Factors
The bull case for RTX rests on its massive $289 billion backlog, improving margins, and a consensus analyst target of $234.41 that implies 23.8% upside. The bear case centers on the recent 10.66% monthly decline, a premium valuation (EV/EBITDA of 18.61x vs. sector 12x-15x), and competitive threats from GE Aerospace. Currently, the bull evidence is stronger: the forward PE of 24.12x and PEG of 0.91 suggest the stock is reasonably valued relative to growth, and the margin recovery is tangible with net margin up 177 basis points YoY. The single most important tension is whether RTX can sustain its margin expansion trajectory; if it does, the stock is likely to re-rate toward analyst targets, but if margins stall, the premium valuation could compress sharply.
Bullish
- Massive $289B Backlog Provides Visibility: RTX's $289 billion backlog spans defense and commercial aerospace, providing multi-year revenue visibility that supports an 8.72% YoY revenue growth rate in Q1 2026. This backlog is diversified across three roughly equal segments, reducing dependence on any single program or customer.
- Margin Recovery Underway: Q1 2026 net margin improved to 9.33% from 7.56% in Q1 2025, and operating margin rose to 11.57% from 10.02%. Gross margin also expanded to 20.81% from 20.27% a year earlier, indicating that GTF remediation costs are rolling off and pricing power is holding.
- Analyst Consensus Sees 23.8% Upside: With 22 analysts covering RTX, the consensus rating is Buy (mean 1.87) and the average target price is $234.41, implying 23.8% upside from the current $189.40. The low target of $200 still offers 5.6% upside, suggesting a favorable risk/reward skew.
- Attractive PEG Ratio of 0.91: The PEG ratio of 0.908 is below 1.0, signaling that RTX is undervalued relative to its expected earnings growth. The forward PE of 24.12x is well below the trailing PE of 36.53x, implying the market expects a 51% earnings recovery that would bring valuation in line with peers.
Bearish
- Recent Price Momentum Sharply Negative: RTX is down 10.66% over the past month, significantly underperforming the S&P 500's +0.69% gain, resulting in a -11.35% relative strength gap. This divergence from the positive 1-year trend (+17.99%) suggests a corrective phase that could persist.
- Valuation Premium to Sector: EV/EBITDA of 18.61x is a 24% to 55% premium to the industrials sector average of 12x-15x, and the trailing PE of 36.53x sits near the historical high of 37.89x. This leaves little room for error if margin expansion disappoints.
- Thin Liquidity and High Leverage: The current ratio of 1.026 is barely above 1.0, indicating tight short-term liquidity, while debt-to-equity of 0.606 and interest expense of $406 million in Q1 2026 remain a burden. ROA is just 4.21%, reflecting the capital-intensive nature of the business.
- Competitive Pressure from GE Aerospace: Recent news highlights GE Aerospace's commercial engine strength and its acquisition of CPP to expand castings capacity, intensifying competition in the commercial aftermarket. RTX's Pratt & Whitney segment may face share pressure if GE continues to outexecute on margins.
RTX Technical Analysis
RTX is in a choppy, range-bound consolidation rather than a clean trend, with the stock up 17.99% over the past year but only 0.75% over three months and down 0.16% over six months, meaning essentially all of the trailing-year gain was earned in a single sharp move. At the current price of $189.40, the shares sit at roughly 47.5% of the 52-week range between a low of $155.64 and a high of $226.88, which places them in the lower-middle of the band and signals neither momentum leadership nor deep-value territory. The 1-year relative strength versus SPY of just 0.78% confirms RTX has essentially matched the market over twelve months, while the 6-month relative strength of -21.81% shows it has badly lagged during the most recent stretch. Recent momentum has deteriorated sharply: the 1-month change of -10.66% is a significant drawdown from the August highs, and it diverges meaningfully from the positive 1-year trend, suggesting the stock is in a corrective phase or mean-reversion pullback rather than a fresh leg higher. The 3-month change of +0.75% versus SPY's +5.81% (a -5.06% relative strength gap) shows RTX has been a source of funds for investors rotating into stronger industrials, and the 1-month relative strength of -11.35% versus SPY's +0.69% underscores how pronounced the recent underperformance has been. With a beta of just 0.287, RTX is roughly 71% less volatile than the broad market, which explains the muted day-to-day swings but also means the recent -10.66% monthly decline is unusually large for this name and warrants attention as a potential sentiment shift. Key support sits at the 52-week low of $155.64, roughly 17.8% below the current price, while resistance is defined by the 52-week high of $226.88, about 19.8% above the current price. A breakout above $226.88 would confirm a resumption of the longer-term uptrend and likely require a fundamental catalyst such as margin expansion or a large defense award, whereas a breakdown below the $155.64 low would signal that the market is pricing in deteriorating fundamentals and could open a deeper correction. The maximum drawdown of -19.32% over the period shows the stock has already demonstrated it can fall meaningfully from highs, and the low beta means position sizing can be larger for the same dollar risk, though the recent volatility spike argues for tighter stops.
Beta
0.29
0.29x market volatility
Max Drawdown
-19.3%
Largest decline past year
52-Week Range
$156-$227
Price range past year
Annual Return
+10.8%
Cumulative gain past year
| Period | RTX Return | S&P 500 |
|---|---|---|
| 1m | -8.0% | +0.6% |
| 3m | -7.3% | +3.3% |
| 6m | -5.9% | +17.4% |
| 1y | +10.8% | +15.0% |
| ytd | -1.4% | +12.9% |
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RTX Fundamental Analysis
RTX's revenue trajectory is solidly growing, with Q1 2026 revenue of $22.076 billion representing 8.72% year-over-year growth versus Q1 2025's $20.306 billion, and the sequential trend is encouraging: revenue rose from $21.581 billion in Q2 2025 to $22.478 billion in Q3 2025 to $24.238 billion in Q4 2025 before the seasonal Q1 dip to $22.076 billion. The segment mix is well balanced, with Pratt & Whitney at $8.173 billion, Collins Aerospace at $7.602 billion, and Raytheon Intelligence & Space at $6.945 billion, meaning no single segment dominates and the company benefits from both commercial aftermarket recovery and defense demand. The 8.72% growth rate is healthy for a company of this scale and suggests the $289 billion backlog is converting into revenue at a steady pace, though the sequential decline from Q4 to Q1 reflects normal seasonality rather than a demand problem. Profitability is improving but remains modest for the sector: Q1 2026 net income was $2.059 billion on a 9.33% net margin, with gross margin at 20.81% and operating margin at 11.57%, up from Q1 2025's 7.56% net margin and 10.02% operating margin. The gross margin trend has been choppy, moving from 20.27% in Q1 2025 to 20.28% in Q2 2025 to 20.38% in Q3 2025 to 19.46% in Q4 2025 and back to 20.81% in Q1 2026, which suggests the company is holding the line on pricing but not yet seeing the step-change in profitability that bulls expect from GTF remediation costs rolling off. The Q2 2024 quarter, with net income of just $111 million and a 0.56% net margin, remains the trough, and the recovery since then has been steady, with net income rising to $1.657 billion in Q2 2025, $1.918 billion in Q3 2025, $1.622 billion in Q4 2025, and $2.059 billion in Q1 2026. The balance sheet is reasonably healthy but not fortress-like: debt-to-equity is 0.606, the current ratio is 1.026 (barely above 1.0, indicating tight liquidity), and ROE is 10.32% while ROA is just 4.21%. Free cash flow tells a more encouraging story, with TTM FCF of $8.359 billion and quarterly FCF of $1.211 billion in Q1 2026, $3.195 billion in Q4 2025, $4.025 billion in Q3 2025, and -$72 million in Q2 2025, showing the company generates substantial cash but with meaningful quarterly volatility tied to working capital swings. The dividend payout ratio of 53.09% and dividend yield of 1.45% indicate a sustainable but not aggressive capital return policy, and the company spent $915 million on dividends in Q1 2026 while repaying $500 million of debt, suggesting a balanced approach to capital allocation.
Quarterly Revenue
$24.7B
2026-06
Revenue YoY Growth
+14.5%
YoY Comparison
Gross Margin
20.8%
Latest Quarter
Free Cash Flow
$12.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is RTX Overvalued?
Because RTX is profitable with trailing net income of $2.059 billion in the most recent quarter and positive EPS of $0.0274 on a TTM basis, the PE ratio is the appropriate primary metric, and the trailing PE of 36.53x versus the forward PE of 24.12x implies the market expects earnings to grow roughly 51% over the next year, a substantial acceleration that would need to be driven by margin expansion and GTF cost normalization. The forward PE of 24.12x is more reasonable for a large-cap industrial with mid-single-digit to low-double-digit growth, and the PEG ratio of 0.908 suggests the stock is actually undervalued relative to its expected growth rate, which is a rare signal for a defense prime. The EV/EBITDA of 18.61x and EV/Sales of 3.06x are elevated relative to the broader industrials sector, where EV/EBITDA typically ranges from 12x to 15x, implying RTX trades at a 24% to 55% premium to sector averages on an EBITDA basis. The PS ratio of 2.78x is more moderate and reflects the company's low-margin, high-volume business model, while the PB ratio of 3.77x is above the sector median of roughly 2.5x to 3.0x, suggesting the market is paying up for RTX's backlog visibility and defense exposure. Compared to pure-play defense peers that often trade at 15x to 20x forward earnings, RTX's 24.12x forward PE represents a premium, but the discount to its own trailing multiple and the PEG below 1.0 suggest the premium is justified by the earnings recovery story. Historically, RTX's PE ratio has ranged from a low of 18.95x in Q1 2024 to a high of 37.89x in Q4 2025, with the current trailing PE of 36.53x sitting near the top of that range, which suggests the market is pricing in optimistic expectations for margin recovery and backlog conversion. The PS ratio tells a similar story, having risen from 5.72x in Q4 2023 to 11.78x in Q1 2026 on the historical ratios data, though the current PS of 2.78x from the valuation data appears to use a different share count or revenue base and is not directly comparable. The PB ratio of 3.77x is above the historical average of roughly 2.5x to 3.0x seen through 2022-2024, indicating the market values RTX's equity at a premium to book value that reflects intangible assets, backlog, and brand strength rather than tangible book. On balance, the valuation is full but not stretched, with the forward PE and PEG ratio providing the strongest support for the bull case, while the trailing PE near historical highs and the EV/EBITDA premium to sector argue for caution.
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
RTX faces financial and operational risks stemming from its capital-intensive business model and recent margin volatility. The current ratio of 1.026 is barely above 1.0, indicating minimal short-term liquidity buffer, while debt-to-equity of 0.606 and quarterly interest expense of $406 million consume a meaningful portion of operating income. Gross margin has been choppy, ranging from 19.46% in Q4 2025 to 20.81% in Q1 2026, and any resurgence in GTF engine remediation costs could pressure profitability. Additionally, revenue is concentrated in aerospace and defense, making RTX vulnerable to cyclical downturns in commercial air travel or shifts in defense budgets. The company's ROA of 4.21% and ROE of 10.32% are modest for a large-cap industrial, highlighting the need for continued margin improvement to justify its valuation.
Market and competitive risks are significant given RTX's premium valuation and low beta. The stock trades at an EV/EBITDA of 18.61x, a 24% to 55% premium to the industrials sector average, leaving it exposed to multiple compression if growth slows. With a beta of 0.287, RTX is less volatile than the market, but this also means it may lag during strong bull markets, as evidenced by its 6-month relative strength of -21.81% versus SPY. Competitive threats are intensifying: GE Aerospace's recent acquisition of CPP to expand castings capacity and its strong commercial engine performance could erode Pratt & Whitney's market share. Regulatory and geopolitical risks, such as changes in defense spending priorities or the outcome of the JATM missile deal, could also impact Raytheon's segment. The recent 10.66% monthly decline, despite a positive 1-year trend, suggests that market sentiment is fragile and could deteriorate further if any of these risks materialize.
The worst-case scenario for RTX would involve a combination of margin stagnation, competitive share loss, and a broad market downturn. If GTF remediation costs persist and GE Aerospace continues to gain ground, RTX's earnings recovery could stall, leading to a valuation reset. In this scenario, the stock could retest its 52-week low of $155.64, representing a 17.8% decline from the current price of $189.40. The analyst low target of $200 is above the current price, but in a severe downturn, the stock could overshoot to the downside, especially given the maximum drawdown of -19.32% observed over the past period. A drop to $155.64 would wipe out nearly 18% of capital, and if the broader market enters a correction, the low beta might not provide much protection given the stock's recent volatility spike. Investors should be prepared for a potential 20-25% drawdown in a bear case, with the 52-week low serving as a critical support level.
FAQ
The key risks for RTX include: 1) Financial risks: The current ratio of 1.026 is barely above 1.0, indicating tight liquidity, and debt-to-equity of 0.606 with $406 million in quarterly interest expense could strain finances if earnings decline. 2) Competitive risks: GE Aerospace's recent acquisition of CPP and strong commercial engine performance could erode Pratt & Whitney's market share, as highlighted in recent news. 3) Macro risks: With a beta of 0.287, RTX is less volatile than the market, but a broad industrial downturn could still pressure the stock, especially given its premium valuation. 4) Company-specific risks: Persistent GTF engine remediation costs or delays in defense programs like JATM could derail the margin recovery story. Ranked by severity, the margin recovery risk is most critical, followed by competitive threats and liquidity concerns.
The 12-month forecast for RTX includes three scenarios: Bull case (25% probability) targets $234.41 to $265, driven by successful margin expansion above 10% and defense contract wins. Base case (55% probability) targets $200 to $234.41, assuming steady execution with 8-10% revenue growth and net margin around 9.5-10%. Bear case (20% probability) targets $155.64 to $200, triggered by margin stagnation, competitive share loss, or defense budget cuts. The base case is most likely, with the key assumption that RTX continues to convert its $289 billion backlog into revenue while improving profitability. The analyst average target of $234.41 aligns with the base case, implying 23.8% upside from the current price of $189.40.
RTX's valuation is mixed: the trailing PE of 36.53x is near its historical high of 37.89x, suggesting the stock is overvalued on a trailing basis. However, the forward PE of 24.12x and PEG ratio of 0.91 indicate that the market is pricing in a significant earnings recovery, making it undervalued relative to future growth. The EV/EBITDA of 18.61x is a 24% to 55% premium to the industrials sector, which is justified by RTX's backlog visibility and defense exposure. Compared to pure-play defense peers trading at 15x-20x forward earnings, RTX's 24.12x forward PE is a premium, but the discount to its own trailing multiple suggests the market expects margin expansion. Overall, the stock is fairly valued to slightly undervalued on a forward basis, but the premium to sector averages leaves little room for error.
RTX appears to be a good buy for investors with a medium to long-term horizon, given the 23.8% upside to the analyst average target of $234.41 and a consensus Buy rating from 22 analysts. The stock trades at a forward PE of 24.12x, which is reasonable relative to its expected earnings growth, and the PEG ratio of 0.91 suggests undervaluation. However, the recent 10.66% monthly decline and premium EV/EBITDA of 18.61x indicate near-term risks. The biggest downside risk is a retest of the 52-week low of $155.64, representing a 17.8% decline. For risk-averse investors, waiting for a confirmed margin recovery in the next earnings report might be prudent, while those with a higher risk tolerance could find the current pullback an attractive entry point.
RTX is more suitable for long-term investment due to its stable business model, $289 billion backlog, and dividend yield of 1.45%. The low beta of 0.287 and consistent free cash flow generation ($8.359 billion TTM) make it a lower-volatility holding, but the recent 10.66% monthly decline shows it is not immune to short-term swings. The company's growth stage is mature, with steady 8.72% revenue growth, and earnings visibility is high thanks to the backlog. For short-term traders, the stock's low beta and recent underperformance may offer limited opportunities, but the upcoming earnings report could provide a catalyst. A suggested minimum holding period is 12-18 months to allow the margin recovery story to fully play out and to capture the upside to analyst targets.