RTX
RTX
$214.38
-0.40%
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 supplier), Pratt & Whitney (engines), and Raytheon (defense prime). As a market leader with roughly equal exposure to commercial aerospace and defense, RTX benefits from a unique dual-engine growth profile. The current investor narrative centers on record defense spending tailwinds, with the U.S. defense budget reaching $1.5 trillion in 2027, alongside a commercial aerospace recovery driving aftermarket demand. Recent geopolitical tensions, including U.S.-Iran strikes, have further boosted defense stocks, while RTX's massive backlog and strong competitive positioning underpin the bull case.…
RTX
RTX
$214.38
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Investment Opinion: Should I buy RTX Today?
Rating: Buy. RTX offers a unique combination of accelerating revenue growth (8.7% YoY), expanding margins, and exposure to record defense spending, making it a core holding for investors seeking growth and defense exposure. The analyst consensus is Buy with an average target of $226.82, implying 6.6% upside, but the forward PE of 27.5x suggests further earnings-driven gains.
Supporting Evidence: The primary valuation metric is the forward PE of 27.5x, which is above the industry average of ~22x but justified by superior growth (8.7% vs. ~5% industry) and higher net margins (9.3% vs. ~7% industry). Revenue growth is accelerating, with Q1 2026 up 8.7% YoY, and net income grew 34% YoY to $2.06B. Free cash flow is robust at $8.36B TTM, yielding 3.4%. The PEG ratio of 0.91 indicates the stock is reasonably valued relative to its growth rate, and the analyst high target of $265 implies 24.5% upside if defense spending and commercial recovery exceed expectations.
Risks & Conditions: The biggest risks are valuation compression (if growth disappoints) and geopolitical disruptions to supply chains. This Buy rating would be downgraded to Hold if revenue growth decelerates below 5% or if the forward PE expands above 30x without corresponding earnings beats. Conversely, an upgrade would be warranted if the stock pulls back to a forward PE below 22x or if defense budget increases accelerate. Overall, RTX is fairly valued relative to its growth trajectory but overvalued on a pure peer comparison; the premium is justified by its market position and margin expansion potential.
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RTX 12-Month Price Forecast
RTX presents a favorable risk/reward over the next 12 months, driven by accelerating revenue growth, expanding margins, and a supportive defense spending backdrop. The base case of a 6.6% return to the average target is modest, but the bull case offers 24.5% upside if catalysts materialize. The main risk is valuation, as the stock trades at a premium to peers, but the PEG ratio below 1.0 suggests the growth justifies the multiple. We would upgrade to a more bullish stance if Q2 2026 revenue growth exceeds 10% or if the forward PE compresses below 25x, and downgrade to neutral if growth decelerates below 5% or if geopolitical risks materially impact operations.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on RTX's 12-month outlook, with a consensus price target around $229.82 and implied upside of +7.2% versus the current price.
Average Target
$229.82
0 analysts
Implied Upside
+7.2%
vs. current price
Analyst Count
—
covering this stock
Price Range
$180 - $265
Analyst target range
RTX is covered by 22 analysts, with a consensus recommendation of 'Buy' (mean rating 1.87 on a 1-5 scale, where 1 is Strong Buy). The average target price is $226.82, implying 6.6% upside from the current price of $212.79. The distribution leans bullish: 10 analysts rate it Buy, 7 Overweight, and 5 Hold, with no Sell ratings. Recent upgrades include Jefferies moving from Hold to Buy on June 4, 2026, and consistent Buy ratings from Citigroup and JP Morgan. The target range spans from $180.00 (low) to $265.00 (high). The high target of $265 assumes continued defense spending growth, commercial aerospace recovery, and potential multiple expansion, representing 24.5% upside. The low target of $180 implies a 15.4% downside, likely pricing in risks like geopolitical disruption, supply chain issues, or a recession impacting air travel. The spread between low and high ($85) is wide, reflecting high uncertainty around defense budgets and commercial aerospace cycles. However, the recent upgrade momentum and strong consensus suggest analysts have growing conviction in RTX's growth story. The implied upside to the average target is modest, but the forward PE of 27.5x leaves room for earnings-driven gains.
Bulls vs Bears: RTX Investment Factors
RTX presents a compelling dual-engine growth story with accelerating revenue (8.7% YoY), expanding margins (net margin 9.3%), and record defense spending tailwinds. The bull case is supported by strong free cash flow ($8.36B TTM) and a consensus Buy rating from analysts. However, the stock's valuation is stretched at 36.5x trailing PE, a 66% premium to the industry average, and the modest 6.6% upside to the average analyst target limits near-term return potential. The single most important tension is whether the company's earnings growth (implied by the forward PE of 27.5x) can materialize and justify the premium — if margins continue to expand and defense budgets hold, the stock can grow into its valuation; if growth disappoints, multiple compression could lead to significant downside. Currently, the bull case has stronger evidence given the accelerating fundamentals and favorable macro backdrop, but the valuation risk tempers enthusiasm.
Bullish
- Accelerating Revenue Growth: Q1 2026 revenue grew 8.7% YoY to $22.08B, accelerating from 6.3% in Q4 2025 and 4.2% in Q3 2025, driven by commercial aerospace recovery and record defense budgets.
- Expanding Profit Margins: Net margin improved to 9.3% in Q1 2026 from 6.7% in Q4 2025 and 7.7% in Q2 2025, reflecting operational leverage and a favorable mix shift toward higher-margin aftermarket and defense sales.
- Record Defense Spending Tailwind: The U.S. defense budget is projected to reach $1.5 trillion by 2027, directly benefiting RTX's Raytheon and Pratt & Whitney segments, which have massive backlogs and strong competitive positions.
- Strong Free Cash Flow Generation: Trailing twelve-month free cash flow is $8.36B, yielding a 3.4% FCF yield, supporting dividends ($915M paid in Q1) and reinvestment with a payout ratio of 53%.
Bearish
- Elevated Valuation Premium: Trailing PE of 36.5x is 66% above the aerospace & defense industry average of ~22x, and the EV/EBITDA of 18.6x is well above the sector median of ~14x, leaving little room for multiple expansion.
- Geopolitical and Supply Chain Risks: U.S.-Iran tensions and reliance on Chinese rare earths for military components (as highlighted in recent news) could disrupt production and increase costs, impacting margins.
- Modest Upside to Analyst Targets: The average analyst target of $226.82 offers only 6.6% upside from the current price of $212.79, suggesting limited near-term appreciation potential given the stock is near its 52-week high.
- Cyclical Exposure to Commercial Aerospace: While defense provides a buffer, RTX's Collins Aerospace and Pratt & Whitney segments are exposed to commercial aerospace cycles; a recession or fuel cost spike (as warned by IATA) could pressure aftermarket demand.
RTX Technical Analysis
RTX is in a sustained uptrend, with the stock up 37.1% over the past year, significantly outperforming the S&P 500's 16.5% gain. The current price of $212.79 sits at 99.0% of its 52-week range ($150.61–$214.89), indicating strong momentum and near all-time highs. This positioning near the top of the range suggests bullish sentiment and potential for a breakout, though it also raises caution about overextension. The stock's beta of 0.30 implies it is significantly less volatile than the market, making it a defensive holding within the industrials sector. Short-term momentum is accelerating sharply: the 1-month return is +15.0% and the 3-month return is +22.1%, both far outpacing the S&P 500's 0.8% and 3.5% respectively. This divergence from the broader market signals strong stock-specific catalysts, likely tied to defense spending and commercial aerospace recovery. The relative strength versus the S&P 500 over 1-month (14.2%) and 3-month (18.6%) confirms this outperformance. Key support lies at the 52-week low of $150.61, while resistance is at the 52-week high of $214.89. A breakout above $214.89 would signal a continuation of the uptrend and likely attract further buying. Conversely, a breakdown below recent support near $190 (the June low) could indicate a pullback. With a beta of 0.30, RTX is 70% less volatile than the market, appealing for risk-averse investors seeking defense exposure.
Beta
0.30
0.30x market volatility
Max Drawdown
-19.3%
Largest decline past year
52-Week Range
$151-$221
Price range past year
Annual Return
+35.3%
Cumulative gain past year
| Period | RTX Return | S&P 500 |
|---|---|---|
| 1m | +13.0% | -0.7% |
| 3m | +23.2% | +2.9% |
| 6m | +6.7% | +7.2% |
| 1y | +35.3% | +16.9% |
| ytd | +14.5% | +8.8% |
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RTX Fundamental Analysis
Revenue growth is solid and accelerating: Q1 2026 revenue of $22.08 billion grew 8.7% year-over-year, up from 6.3% in Q4 2025 and 4.2% in Q3 2025. The three segments—Pratt & Whitney ($8.17B), Collins Aerospace ($7.60B), and Raytheon ($6.95B)—all contributed, with Pratt leading on engine aftermarket and defense demand. The multi-quarter trend shows consistent acceleration, driven by commercial aerospace recovery and elevated defense budgets. This growth trajectory supports the investment case as RTX benefits from both cyclical and secular tailwinds. Profitability is robust and improving: Q1 2026 net income was $2.06 billion, with a net margin of 9.3%, up from 6.7% in Q4 2025 and 7.7% in Q2 2025. Gross margin expanded to 20.8% from 19.5% in Q4 2025, reflecting operational leverage and mix shift. Operating margin of 11.6% is healthy for the aerospace & defense industry, which typically averages 10-12%. The company is solidly profitable with a trailing PE of 36.5x, but the improving margin trajectory suggests further upside. The balance sheet is strong: debt-to-equity is 0.61, moderate for a capital-intensive industry. Free cash flow (FCF) was $1.21 billion in Q1 2026, and trailing twelve-month FCF reached $8.36 billion, yielding a FCF yield of 3.4% based on the current market cap. ROE of 10.3% is respectable, and the current ratio of 1.03 indicates adequate liquidity. RTX generates sufficient cash to fund dividends ($915M paid in Q1) and capex ($644M), with a payout ratio of 53%, leaving room for reinvestment or debt reduction.
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 net income is positive ($2.06B), the primary valuation metric is the PE ratio. The trailing PE is 36.5x, while the forward PE is 27.5x, implying the market expects earnings growth of about 33% over the next year. This gap reflects optimism around margin expansion and revenue acceleration. The PEG ratio of 0.91 suggests the stock is reasonably valued relative to its growth rate, as a PEG below 1.0 often indicates undervaluation. Compared to the aerospace & defense industry average PE of approximately 22x (based on sector data), RTX trades at a 66% premium. This premium is justified by RTX's superior growth (8.7% revenue growth vs. industry ~5%), higher margins (net margin 9.3% vs. industry ~7%), and dominant market position. The EV/EBITDA multiple of 18.6x is also above the industry average of ~14x, reflecting the same factors. Historically, RTX's trailing PE has ranged from 20x to 47x over the past five years. The current 36.5x is above the midpoint of that range, suggesting the market is pricing in above-average expectations. However, the forward PE of 27.5x is closer to the historical median, indicating that if earnings materialize as expected, valuation is not stretched. The PB ratio of 3.77 is near the top of its historical range (1.5x–4.0x), reflecting the premium placed on its asset base and brand.
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 moderate debt-to-equity ratio of 0.61, which is manageable for a capital-intensive industry. However, the company's net margin of 9.3% is still below the pre-pandemic peak, and any reversal in margin expansion (e.g., due to supply chain disruptions or rising input costs) could pressure earnings. The payout ratio of 53% leaves room for dividend growth, but a sharp downturn in commercial aerospace could strain cash flows, as seen in Q2 2024 when net income fell to $111M due to an impairment charge. Revenue concentration is moderate, with three segments each contributing roughly a third, but Pratt & Whitney's engine aftermarket is sensitive to air travel demand, which could be impacted by geopolitical events or fuel cost spikes.
Market & Competitive Risks: RTX trades at a significant premium to its aerospace & defense peers, with a trailing PE of 36.5x versus the industry average of ~22x. This premium makes the stock vulnerable to valuation compression if growth decelerates or if investor sentiment shifts away from defense stocks. The beta of 0.30 indicates low market correlation, but the stock's 37.1% one-year gain has already priced in much of the defense spending optimism. Competitive risks include potential disruption from new entrants in missile defense or engine technology, and the reliance on Chinese rare earths for military components (as noted in recent news) poses a supply chain vulnerability that could take years to resolve.
Worst-Case Scenario: A combination of a sharp recession reducing commercial air travel, a peace dividend cutting defense budgets, and a supply chain crisis (e.g., rare earth shortages) could cause RTX's earnings to fall short of expectations. In such a scenario, the stock could re-rate to a PE of 22x (industry average), implying a price of ~$130 based on forward EPS estimates. This represents a potential downside of 39% from the current price of $212.79, approaching the 52-week low of $150.61 (29% downside) and exceeding the analyst low target of $180 (15.4% downside). The historical max drawdown of 19.32% provides a reference for a less severe correction.
FAQ
The key risks are: 1) Valuation risk — the trailing PE of 36.5x leaves little room for multiple compression if growth disappoints; 2) Geopolitical risk — U.S.-Iran tensions and reliance on Chinese rare earths for defense components could disrupt supply chains and increase costs; 3) Cyclical risk — commercial aerospace exposure means a recession or fuel cost spike could reduce aftermarket demand; 4) Execution risk — margin expansion may not materialize if input costs rise or if Pratt & Whitney faces engine issues. The most severe risk is a combination of these factors leading to a 30%+ decline toward the 52-week low of $150.61.
The 12-month forecast is moderately bullish, with a base case target of $215-$235 (50% probability) based on continued revenue growth and margin expansion. The bull case (30% probability) targets $240-$265, driven by stronger defense spending and commercial recovery, while the bear case (20% probability) sees $180-$200 if a recession or geopolitical shock hits. The analyst average target is $226.82, implying 6.6% upside. The most likely scenario is the base case, where RTX executes on its growth plan and the stock trades near current levels with modest gains.
RTX's trailing PE of 36.5x is significantly above the aerospace & defense industry average of ~22x, indicating a premium valuation. However, the forward PE of 27.5x is closer to the historical median, and the PEG ratio of 0.91 suggests the stock is undervalued relative to its expected earnings growth. The EV/EBITDA of 18.6x is also above the industry average of ~14x, reflecting the market's willingness to pay for RTX's superior growth and margins. Overall, RTX is fairly valued given its growth trajectory and market position, but it is not a bargain — the premium is justified by accelerating revenue, expanding margins, and record defense spending tailwinds.
RTX is a good buy for investors seeking a balanced exposure to defense and commercial aerospace, with accelerating revenue growth (8.7% YoY) and expanding margins. The analyst consensus is Buy with an average target of $226.82, implying 6.6% upside, and the PEG ratio of 0.91 suggests the stock is reasonably valued relative to its growth rate. However, the trailing PE of 36.5x is a 66% premium to the industry average, so the stock is not cheap. The biggest downside risk is a recession or defense budget cuts, which could lead to a 15-30% decline. For long-term investors with a 3-5 year horizon, RTX offers a compelling risk/reward; for short-term traders, the modest upside to the average target limits near-term gains.
RTX is best suited for long-term investment (3-5 years) due to its defensive beta of 0.30, sustainable dividend yield of 1.45%, and exposure to secular defense spending growth. The stock's low volatility makes it less attractive for short-term trading, as the modest 6.6% upside to the average target limits near-term gains. However, the recent momentum (37.1% one-year return) and near all-time high price suggest short-term traders could profit from a breakout above $215. For most investors, a long-term hold aligns with the company's growth trajectory and dividend growth potential.