RTX
RTX
$193.92
+3.73%
RTX Corporation is a diversified aerospace and defense manufacturer formed from the 2020 merger of United Technologies and Raytheon, operating through three roughly balanced segments: Collins Aerospace (avionics, interiors, and aerostructures), Pratt & Whitney (commercial and military aircraft engines), and Raytheon (missiles, missile defense, sensors, and communications systems). The company is a top-tier defense prime and one of the world's largest commercial aerospace suppliers, giving it a distinctive hybrid identity that pairs cyclical aftermarket exposure to global air traffic with more resilient, government-funded defense demand. The current investor narrative centers on the durability of RTX's roughly $289 billion backlog, which spans commercial narrowbody engine orders and missile-defense programs, and on whether management can convert that visibility into margin expansion after several years of supply-chain friction and fixed-price development charges. Recent headlines highlighting missile-defense procurement momentum (including the JATM deal) and Pratt & Whitney's aftermarket recovery have reinforced the growth case, while debate persists over valuation, engine overhaul cost pressures, and execution risk on defense program margins.…
RTX
RTX
$193.92
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 $227.78 and implied upside of +17.5% versus the current price.
Average Target
$227.78
0 analysts
Implied Upside
+17.5%
vs. current price
Analyst Count
—
covering this stock
Price Range
$200 - $250
Analyst target range
Coverage is broad and constructive, with 23 analysts and a consensus recommendation of Buy (mean rating 1.92 on a 1-to-5 scale where lower is more bullish). The average target price of $227.78 implies roughly 17.5% upside from the current $193.92, and notably the lowest target of $200.00 sits about 3.1% above the current price, meaning even the most cautious analyst sees no downside from here. Consensus forward EPS of $10.58 (range $10.24-$10.96) and revenue of $122.69 billion underpin that bullish tilt, and the sentiment leans clearly positive rather than neutral.\n\nThe target range of $200.00 to $250.00 is moderately wide, spanning about 25% around the $227.78 average, which signals meaningful but not extreme disagreement about the pace of margin recovery and backlog conversion. The $250 high target likely assumes multiple expansion toward the mid-20s forward PE alongside accelerating EPS growth and defense order momentum, while the $200 low target prices in slower margin expansion and continued commercial aftermarket cost pressure. Institutional actions show a mild positive drift: Jefferies upgraded to Buy from Hold in June 2026, while TD Cowen, RBC Capital, and Susquehanna maintained Buy/Outperform/Positive ratings through the July earnings cycle, offset by Neutral/Equal Weight stances from UBS, Wells Fargo, and Bernstein; the absence of recent downgrades supports the constructive consensus.
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Bulls vs Bears: RTX Investment Factors
The bull case currently has stronger evidence: revenue is accelerating at 14.49% YoY, operating margin has expanded 144 basis points year over year to 11.38%, free cash flow of $12.019 billion supports a 4.9% FCF yield, and the analyst floor of $200 sits above the current price. The bear case rests primarily on valuation and momentum — a 36.5x trailing PE near the top of the historical band and a six-month relative strength gap of -8.75 points versus SPY — rather than on deteriorating fundamentals. The single most important tension is whether forward EPS of $10.58 arrives fast enough to justify the current price: the entire 33% trailing-to-forward PE compression depends on margin expansion continuing from 8.66% net margin, and a stumble there would compress the multiple toward the high-20s. With beta of only 0.308, the stock is unlikely to be rescued by broad market beta, so company-specific execution on backlog conversion is the decisive variable.
Bullish
- Revenue accelerating at 14.5% YoY: Q2 2026 revenue of $24.708 billion rose 14.49% versus $21.581 billion in Q2 2025, building on sequential progression from $22.076 billion in Q1 2026. Consensus forward revenue of $122.69 billion implies continued double-digit expansion, supported by the roughly $289 billion backlog.
- Operating leverage is materializing: Operating income jumped to $2.811 billion from $2.146 billion a year earlier on only 14.5% revenue growth, lifting operating margin to 11.38% from 9.94% in Q2 2025 and 10.71% in Q4 2025. Net margin expanded from 6.69% in Q4 2025 to 8.66% in Q2 2026, showing the margin recovery thesis is already visible in reported numbers.
- Analyst floor sits above the price: With 23 analysts and a consensus Buy rating (mean 1.92), the average target of $227.78 implies 17.5% upside from $193.92, and even the lowest target of $200.00 is 3.1% above the current price. No analyst in the coverage universe sees downside from here, and Jefferies upgraded to Buy in June 2026.
- Strong free cash flow and covered dividend: Trailing twelve-month free cash flow of $12.019 billion against a $246 billion market cap yields about 4.9%, and Q2 2026 operating cash flow of $4.159 billion comfortably funded $571 million of capex and $983 million of dividends. The 1.45% dividend yield carries a 53.1% payout ratio, leaving room for both reinvestment and returns.
Bearish
- Trailing PE of 36.5x is rich: The trailing PE of 36.5x compares to roughly 26x-28x in late 2024 and early 2025, placing the stock near the upper end of its own valuation band. Price-to-book of 3.77x and EV/EBITDA of 18.6x are premiums to the aerospace and defense sector despite a middle-of-the-road 20.1% gross margin and 10.5% operating margin.
- Momentum has broken down: The stock is down 1.48% over one month and up just 0.21% over three months, lagging SPY by 2.70 and 2.48 points respectively, while the six-month change of -1.27% versus SPY's +7.48% produces an -8.75 relative strength gap. At $193.92 the stock sits only 51.5% through its 52-week range, having failed to reclaim the $226.88 high set in July-August.
- Thin liquidity cushion: The current ratio of 1.026 is barely above 1.0, and interest coverage of roughly 6.6x (interest expense of $428 million against $2.811 billion operating income) leaves only adequate cushion. Debt-to-equity of 0.606 on a capital-intensive manufacturer with heavy pension obligations limits flexibility if margins stall.
- Forward earnings must deliver: The 33% compression from trailing PE of 36.5x to forward PE of 24.6x requires EPS to roughly reach the $10.58 consensus from a trailing figure near $5.30 implied by the 36.5x multiple. If margin expansion or backlog conversion slips, the multiple would likely compress toward the high-20s, and the PEG of 0.91 only looks attractive if that trajectory materializes.
RTX Technical Analysis
RTX is in a broad, choppy uptrend that has stalled into consolidation: the stock is up 23.48% over the past year versus a 15.53% gain for SPY, delivering 7.95 points of relative strength, yet it sits at $193.92, only about 51.5% of the way through its 52-week range of $156.10 to $226.88. That mid-range positioning signals neither momentum-driven overextension nor a falling-knife setup, but rather a market that has repriced the shares higher over twelve months and is now waiting for a fresh catalyst. The 52-week high of $226.88 was set during the July-August surge, and the failure to reclaim it despite a strong annual trend argues for patience rather than chasing strength.\n\nShort-term momentum has clearly decelerated and diverged from the longer-term trend: the stock is down 1.48% over one month and up just 0.21% over three months, badly lagging SPY's +1.22% and +2.69% over the same windows, producing relative strength readings of -2.70 and -2.48. The six-month change of -1.27% (versus SPY +7.48%, a -8.75 relative strength gap) confirms a multi-month sideways-to-lower drift even as the one-year number stays strongly positive, a classic mean-reversion pattern after the sharp July run from roughly $194 to $225. The most recent session, however, delivered a 3.73% single-day jump from $186.95 to $193.92 on elevated volume of about 7.72 million shares, a bullish reversal candle that suggests buyers are defending the high-$180s and could mark the start of a momentum reset.\n\nKey technical levels are well defined: support sits at the 52-week low of $156.10, with a nearer floor around the $180-$184 zone that has repeatedly attracted buyers (including the October 7 close of $180.26), while resistance is the 52-week high of $226.88, with intermediate supply near $210-$215 where the August rally stalled. A breakout above $226.88 would confirm a resumption of the primary uptrend and likely open a new leg higher, whereas a breakdown below $180 would break the recent base and put the $156.10 low in play. Volatility is unusually low for an industrial: beta of just 0.308 means the stock has historically moved only about 31% as much as the market, which supports larger position sizing for a given risk budget but also implies the 3.73% single-day move was a meaningful outlier; the maximum drawdown of -20.06% over the period underscores that low beta does not eliminate event risk around earnings and program announcements.
Beta
0.31
0.31x market volatility
Max Drawdown
-20.1%
Largest decline past year
52-Week Range
$159-$227
Price range past year
Annual Return
+23.5%
Cumulative gain past year
| Period | RTX Return | S&P 500 |
|---|---|---|
| 1m | -1.5% | +0.2% |
| 3m | +0.2% | +2.9% |
| 6m | -1.3% | +8.4% |
| 1y | +23.5% | +14.9% |
| ytd | +3.6% | +11.9% |
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RTX Fundamental Analysis
Revenue is growing at a healthy clip and, importantly, accelerating: Q2 2026 revenue of $24.708 billion rose 14.49% year over year versus $21.581 billion in Q2 2025, building on sequential progression from $22.076 billion in Q1 2026 and $24.238 billion in Q4 2025. The three segments are remarkably balanced, with Pratt & Whitney at $8.889 billion, Raytheon Intelligence & Space at $8.269 billion, and Collins Aerospace at $8.210 billion, meaning no single unit dominates the growth story and the commercial aftermarket and defense backlog both contribute. Trailing twelve-month revenue implied by the quarterly series is roughly $93.5 billion, and consensus estimates of about $122.69 billion for the forward period imply continued double-digit expansion, consistent with the $289 billion backlog narrative. This trajectory supports a durable, multi-year growth case rather than a one-quarter spike.\n\nProfitability is solid and improving: Q2 2026 net income was $2.139 billion on a net margin of 8.66%, with gross margin of 20.77% and operating margin of 11.38%, up from a 9.94% operating margin in Q2 2025 and a 10.71% operating margin in Q4 2025. Gross margin has been remarkably stable in the 19.5%-20.8% band over the past eight quarters, but the operating line is where leverage is showing, as operating income rose to $2.811 billion from $2.146 billion a year earlier on only 14.5% revenue growth. Net margin of 7.60% on a trailing basis is modest for a large-cap industrial but typical of aerospace primes carrying heavy pension and interest burdens; the direction of travel, with net margin expanding from 6.69% in Q4 2025 to 8.66% in Q2 2026, is the key positive.\n\nThe balance sheet is investment-grade solid but not fortress-like: debt-to-equity is 0.606, the current ratio is a thin 1.026, and interest coverage of roughly 6.6x leaves adequate but not abundant cushion. Cash generation is the standout, with trailing twelve-month free cash flow of $12.019 billion against a $246 billion market cap, a free cash flow yield of about 4.9%, and Q2 2026 operating cash flow of $4.159 billion funding $571 million of capex and $983 million of dividends with room to spare. ROE of 10.32% and ROA of 4.21% are respectable for a capital-intensive manufacturer, and the 1.45% dividend yield with a 53.1% payout ratio is comfortably covered, leaving the company able to fund growth internally while returning cash.
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 (Q2 2026 net income of $2.139 billion), the PE ratio is the appropriate primary metric, and the trailing PE of 36.5x against a forward PE of 24.6x is the central valuation fact. That roughly 33% compression from trailing to forward earnings implies the market expects substantial EPS growth, consistent with consensus 2027 EPS estimates of about $10.58 versus the current trailing figure, and it means investors are paying a rich multiple today for earnings that have not yet arrived. The PEG ratio of 0.91 is the counterweight, suggesting the growth-adjusted multiple is actually reasonable if that earnings trajectory materializes.\n\nRelative to the aerospace and defense sector, RTX trades at a premium on most measures: a trailing PE of 36.5x, price-to-sales of 2.78x, price-to-book of 3.77x, and EV/EBITDA of 18.6x, with an EV/sales of 3.04x. The 20.1% gross margin and 10.5% operating margin are middle-of-the-road for the industry, so the premium is better justified by the backlog visibility and balanced commercial/defense mix than by superior profitability; the forward PE of 24.6x is far more palatable and closer to prime-contractor norms, which is why bulls argue the stock is cheaper than it looks.\n\nHistorically, RTX's own valuation band has widened dramatically: the PE ratio was around 26x-28x in late 2024 and early 2025, versus 36.5x today, and price-to-sales has climbed from roughly 7.1x in Q4 2024 to 2.78x on the current share count basis (with historical quarterly PS readings in the 8x-11x range reflecting different share and revenue bases). The stock is therefore near the upper end of its recent valuation range, meaning the market is pricing in optimistic margin expansion and backlog conversion; any execution stumble would likely compress the multiple toward the high-20s, while delivery on forward EPS would validate the current price.
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 and operational risks center on the gap between trailing and forward earnings. The trailing PE of 36.5x versus forward PE of 24.6x means the market has already paid for EPS of roughly $10.58 that has not yet been delivered, so any shortfall in margin expansion is punished twice — once in earnings and once in multiple. The current ratio of 1.026 provides almost no liquidity buffer, interest expense of $428 million in Q2 2026 consumes about 15% of operating income, and gross margin stuck in the 19.5%-20.8% band for eight quarters shows limited ability to absorb cost shocks. Pratt & Whitney engine overhaul cost pressures and fixed-price defense development charges are the specific mechanisms through which a margin miss would arrive.
Market and competitive risks are dominated by valuation compression. At 36.5x trailing earnings, 3.77x book, and 18.6x EV/EBITDA, RTX trades at a premium to aerospace and defense peers despite a 20.1% gross margin and 10.5% operating margin that are only middle-of-the-road for the industry. The stock's beta of 0.308 limits macro-driven downside, but it also means sector rotation away from defensives and toward higher-beta growth would leave RTX behind — already visible in the -8.75 six-month relative strength gap versus SPY. Competitive pressure from GE Aerospace's commercial engine strength and supply-chain investments, plus L3Harris' propulsion capacity expansion backed by a $6 billion THAAD contract, threatens share in exactly the segments driving RTX's growth.
Worst-case scenario: a Q3 earnings miss driven by Pratt & Whitney overhaul cost overruns combines with slower defense order conversion, forcing management to guide forward EPS below the $10.24 low end of consensus and triggering analyst downgrades from the current Buy consensus. The multiple compresses from 36.5x toward the high-20s while estimates fall, a double hit that would take the stock from $193.92 toward the $156.10 52-week low — a decline of roughly 19.5%. A more moderate adverse path to the $180 support zone that held on October 7 represents about -7.2%, while the -20.06% maximum drawdown already observed shows the full downside is realistic rather than theoretical.