RTX
RTX
$195.34
-1.18%
RTX Corporation is an aerospace and defense manufacturer formed from the merger of United Technologies and Raytheon, operating through three roughly equal segments: Collins Aerospace (a diversified aerospace supplier), Pratt & Whitney (commercial and military aircraft engine manufacturer), and Raytheon (a defense prime contractor supplying missiles, missile defense systems, sensors, and communications technology). As one of the largest global aerospace and defense primes with approximately 180,000 employees and a market capitalization near $246 billion, RTX occupies a unique dual-exposure position spanning commercial aerospace aftermarket and defense procurement, distinguishing it from pure-play defense contractors or commercial-only suppliers. The current investor narrative centers on RTX's massive $289 billion backlog, which provides multi-year revenue visibility across both defense and commercial aerospace, alongside improving margin expansion that has outpaced peers like GE Aerospace. Recent headlines highlight defense supply shortages amid geopolitical tensions (Iran) benefiting RTX alongside LMT and LHX, while the commercial engine strength at Pratt & Whitney and Collins Aerospace continues to ride robust aerospace demand, though execution on margin expansion and supply chain management remain key watch items.…
RTX
RTX
$195.34
Related headlines
Investment Opinion: Should I buy RTX Today?
The synthesized recommendation is a Buy, anchored by the analyst consensus rating of 'buy' (mean 1.87) and an average target price of $234.82, implying 18.8% upside from $197.68. The core thesis is that RTX's $289 billion backlog and accelerating margin expansion (operating margin up to 11.57% in Q1 2026) will drive earnings growth that justifies the premium valuation, while the recent pullback offers an attractive entry point. With 22 analysts covering the stock and a PEG ratio of 0.91, the risk/reward skews favorably for long-term investors.
Supporting evidence includes: 1) Revenue growth of 8.72% YoY in Q1 2026, with a multi-quarter trend of consistent expansion; 2) Operating margin expansion from 9.94% in Q2 2025 to 11.57% in Q1 2026, outpacing peers like GE Aerospace; 3) Free cash flow of $8.36 billion TTM, providing ample capacity for dividends and debt reduction; 4) Forward PE of 25.16x, which is more moderate than the trailing 36.53x and implies significant EPS growth; and 5) The stock trades at a discount to its 52-week high of $226.88, offering 14.8% upside to that level alone. The dividend yield of 1.45% is modest but sustainable with a payout ratio of 53.09%.
The biggest risks that could invalidate the thesis are: 1) A failure to sustain margin expansion, which would likely compress the multiple; 2) Supply chain disruptions delaying backlog conversion; and 3) A broader market rotation out of defensives. The rating would upgrade to a Strong Buy if the stock breaks above $226.88 with volume, or downgrade to Hold if operating margins fall below 10% for two consecutive quarters. Relative to its history, RTX is fairly valued on a forward basis (forward PE 25.16x vs. historical mid-range) but appears undervalued given its growth prospects, as the PEG below 1.0 suggests. The stock is not a deep-value play but offers a balanced risk/reward for growth-oriented investors.
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RTX 12-Month Price Forecast
RTX presents a compelling bullish case driven by its massive backlog, improving margins, and attractive PEG ratio. The recent pullback of 11.26% in the past month has created a more favorable entry point, with the stock trading 12.9% below its August high. Analyst sentiment remains positive, with 22 analysts averaging a 'buy' rating and a target implying 18.8% upside. However, the elevated trailing PE of 36.53x and execution risks warrant a medium confidence level. I would upgrade to high confidence if the stock stabilizes above $200 and operating margins continue to expand, or downgrade to neutral if margins fall below 10% or the backlog conversion slows.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on RTX's 12-month outlook, with a consensus price target around $234.82 and implied upside of +20.2% versus the current price.
Average Target
$234.82
0 analysts
Implied Upside
+20.2%
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 sell), indicating a moderately bullish consensus. The average target price is $234.82, which implies approximately +18.8% upside from the current price of $197.68. The consensus leans bullish, supported by recent institutional actions including Jefferies upgrading RTX from Hold to Buy on June 4, 2026, and consistent Buy/Overweight ratings from Citigroup, Morgan Stanley, JP Morgan, and RBC Capital throughout 2026, with UBS maintaining a Neutral stance as the primary dissenting voice.
The full analyst target range spans from a low of $200.00 to a high of $265.00, representing a spread of $65.00 or approximately 32.5% of the current price, which signals moderate-to-high uncertainty in forward estimates. The high target of $265.00 likely assumes successful margin expansion, accelerated backlog conversion, and multiple expansion driven by defense spending tailwinds and commercial aerospace recovery, while the low target of $200.00 — only marginally above the current price — prices in execution risks, potential margin compression, or a more conservative growth outlook. The estimated EPS average of $10.47 (range $10.16 to $10.83) and estimated revenue average of $121.65 billion (range $118.85 billion to $124.86 billion) provide the fundamental basis for these targets. The relatively tight EPS estimate range suggests strong conviction in near-term earnings, while the wider price target spread reflects differing views on the appropriate multiple to apply, with the consensus average target implying that analysts see meaningful value at current levels despite the recent pullback.
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Bulls vs Bears: RTX Investment Factors
The bull case for RTX rests on its $289 billion backlog, improving margins (operating margin up to 11.57% in Q1 2026), and a PEG ratio below 1.0 that suggests undervaluation relative to growth. The bear case centers on the elevated trailing PE of 36.53x, recent momentum deterioration (-11.26% in one month), and execution risks in converting backlog amid supply chain pressures. Currently, the bull evidence appears stronger given the consistent revenue growth (8.72% YoY), margin expansion outpacing peers like GE Aerospace, and a consensus analyst target implying 18.8% upside. The single most important tension is whether RTX can sustain its margin expansion trajectory; if operating margins continue to climb toward management's targets, the stock likely re-rates higher, but any stall could trigger multiple compression given the premium valuation.
Bullish
- Massive $289B Backlog Provides Visibility: RTX's $289 billion backlog spans defense and commercial aerospace, underpinning multi-year revenue visibility. Q1 2026 revenue of $22.08 billion grew 8.72% YoY, and the backlog covers roughly 12x trailing annual revenue, providing exceptional earnings predictability.
- Margin Expansion Outpacing Peers: Operating margin rose from 9.94% in Q2 2025 to 11.57% in Q1 2026, while net margin improved to 9.33% from 6.69% in Q4 2025. This trajectory contrasts with GE Aerospace's margin compression, highlighting RTX's operational execution.
- Attractive PEG Ratio Below 1.0: The PEG ratio of 0.91 suggests RTX is undervalued relative to its expected earnings growth. Forward PE of 25.16x implies ~45% EPS expansion from trailing levels, and the PEG below 1.0 provides valuation support.
- Strong Analyst Consensus and Upside: 22 analysts rate RTX a 'buy' with a mean of 1.87 and an average target of $234.82, implying 18.8% upside from $197.68. Recent upgrades include Jefferies (Hold to Buy) and consistent Buy ratings from Citigroup, Morgan Stanley, and JP Morgan.
Bearish
- Elevated Trailing Valuation Near Historical Highs: Trailing PE of 36.53x sits near the top of its historical range (18.95x-37.89x), and EV/EBITDA of 18.61x is elevated. The premium to the sector's mid-to-high teens forward multiple may compress if growth disappoints.
- Sharp Recent Momentum Deterioration: The stock fell 11.26% in the past month, underperforming SPY by 10.20 percentage points, and is down 12.9% from its August 18 high of $225.49. This divergence from the 1-year +25.39% gain signals potential trend reversal.
- Tight Liquidity and High Payout Ratio: Current ratio of 1.03 indicates minimal short-term liquidity cushion, and the payout ratio of 53.09% leaves limited room for dividend increases if earnings falter. Debt-to-equity of 0.61 is manageable but not conservative for the sector.
- Execution Risk on Backlog Conversion: Converting the $289 billion backlog requires flawless supply chain management amid industry-wide shortages. Any delays or cost overruns could pressure margins, as evidenced by the Q2 2024 net margin of just 0.56% during a prior execution stumble.
RTX Technical Analysis
RTX is in a broad recovery uptrend, with the 1-year price change of +25.39% significantly outpacing SPY's +16.22% over the same period, generating relative strength of +9.17%. The stock is trading at $197.68, which sits at approximately 58.9% of its 52-week range (low of $155.64, high of $226.88), placing it in the upper-middle portion of its annual band but well off its highs. This positioning suggests the stock retains positive longer-term momentum but has ceded meaningful ground from its peak, creating a potential accumulation zone rather than an overextended momentum chase. The 6-month change of -3.34% and YTD gain of +5.57% further confirm a market that has been consolidating gains rather than trending decisively in either direction.
Recent momentum has deteriorated sharply, with the 1-month price change of -11.26% representing a significant deceleration from the 3-month gain of +7.71%. This divergence is striking: the stock rallied strongly through July and August (peaking at $225.49 on August 18) before selling off aggressively through September, with the current price of $197.68 down about 12.9% from that recent high. The relative strength metrics confirm this deterioration, with 1-month relative strength of -10.20% against SPY versus 3-month relative strength of +4.67%, indicating RTX has significantly underperformed the market over the past month after outperforming over three months. This pattern of a sharp pullback within a longer-term uptrend could signal either a healthy mean-reversion correction or the early stages of a trend reversal, and the divergence between the 1-year (+25.39%) and 1-month (-11.26%) trends warrants close monitoring for stabilization signals.
Key technical levels are well-defined: support rests at the 52-week low of $155.64, while resistance sits at the 52-week high of $226.88. A breakout above $226.88 would signal renewed bullish conviction and likely target new all-time highs, while a breakdown below $155.64 would represent a significant technical failure and could trigger accelerated selling. The stock's beta of 0.287 is remarkably low, indicating RTX is approximately 71% less volatile than the broader market, which has important implications for position sizing — investors can hold larger positions relative to market risk, but should also recognize that the recent -11.26% monthly decline occurred despite this low beta, suggesting stock-specific headwinds. The maximum drawdown of -19.32% over the period further contextualizes the risk profile, showing the stock has experienced meaningful peak-to-trough declines even within its longer-term uptrend.
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
+25.3%
Cumulative gain past year
| Period | RTX Return | S&P 500 |
|---|---|---|
| 1m | -12.4% | -2.0% |
| 3m | +4.6% | +1.4% |
| 6m | -4.5% | +15.0% |
| 1y | +25.3% | +15.7% |
| ytd | +4.3% | +11.6% |
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RTX Fundamental Analysis
RTX's revenue trajectory remains solidly positive, with Q1 2026 revenue of $22.08 billion representing 8.72% year-over-year growth from Q1 2025's $20.31 billion. The multi-quarter trend shows consistent expansion: quarterly revenues progressed from $19.72 billion in Q2 2024 to $20.09 billion in Q3 2024, $21.62 billion in Q4 2024, $20.31 billion in Q1 2025, $21.58 billion in Q2 2025, $22.48 billion in Q3 2025, $24.24 billion in Q4 2025, and $22.08 billion in Q1 2026. The revenue segment breakdown shows Pratt & Whitney as the largest contributor at $8.17 billion, followed by Collins Aerospace at $7.60 billion and Raytheon Intelligence & Space at $6.95 billion, indicating balanced diversification across commercial and defense end markets. This steady top-line growth, underpinned by a $289 billion backlog, implies strong multi-year revenue visibility and supports the investment case for sustained earnings expansion.
RTX is solidly profitable, with Q1 2026 net income of $2.06 billion on revenue of $22.08 billion, yielding a net margin of 9.33% — a notable improvement from the 6.69% net margin in Q4 2025 and 7.68% in Q2 2025. Gross margin has been relatively stable in the 19.5% to 20.8% range over recent quarters, with Q1 2026 at 20.81%, up from 19.46% in Q4 2025 and 20.28% in Q2 2025. Operating margin has shown a clear upward trajectory, rising from 9.94% in Q2 2025 to 10.71% in Q4 2025 and reaching 11.57% in Q1 2026, demonstrating meaningful margin expansion. The trailing twelve-month net margin of 7.60% and operating margin of 10.50% reflect the company's ability to convert its massive revenue base into consistent profitability, with the Q1 2026 EBITDA of $4.00 billion representing an 18.11% EBITDA margin, which is healthy for a capital-intensive aerospace and defense manufacturer.
RTX's balance sheet and cash flow profile reflect a financially disciplined company with manageable leverage. The debt-to-equity ratio of 0.61 is conservative for the sector, and the current ratio of 1.03 indicates adequate short-term liquidity, though it is relatively tight. Free cash flow on a trailing twelve-month basis stands at $8.36 billion, with Q1 2026 free cash flow of $1.21 billion after $644 million in capital expenditures, down from Q4 2025's $3.20 billion FCF but consistent with typical Q1 seasonality. Return on equity of 10.32% and return on assets of 4.21% demonstrate reasonable capital efficiency, while the interest coverage ratio of 6.29x (Q1 2026) provides a comfortable cushion for debt servicing. The company returned $915 million in dividends during Q1 2026 while repaying $500 million in debt, indicating balanced capital allocation between shareholder returns and deleveraging, with the payout ratio of 53.09% suggesting the dividend is well-covered by earnings.
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?
Because RTX is profitable with positive net income of $2.06 billion in Q1 2026, the PE ratio is the appropriate primary valuation metric. The trailing PE of 36.53x compares to a forward PE of 25.16x, implying the market expects significant earnings growth — approximately 45% EPS expansion — over the next twelve months. This large gap between trailing and forward multiples reflects the market's confidence in RTX's earnings acceleration, driven by margin expansion, backlog conversion, and favorable defense spending dynamics. The PEG ratio of 0.91, below 1.0, suggests the stock is reasonably valued relative to its expected growth rate, which is a constructive signal for long-term investors.
Comparing RTX's valuation to the broader Industrials/Aerospace & Defense sector, the trailing PE of 36.53x and forward PE of 25.16x represent a premium to the sector's typical mid-to-high teens to low-20s forward multiple, though the premium is partially justified by RTX's superior margin expansion trajectory relative to peers like GE Aerospace, which has faced margin compression. The PS ratio of 2.78x and EV/EBITDA of 18.61x are elevated but reflect the company's strong backlog visibility and improving profitability. The dividend yield of 1.45% is modest but sustainable with a payout ratio of 53.09%, and the PB ratio of 3.77x indicates the market values RTX's asset base at a premium, consistent with its strong competitive moat in aerospace and defense.
Historically, RTX's PE ratio has ranged from a low of approximately 18.95x (Q1 2024) to a high of 37.89x (Q4 2025), with the current trailing PE of 36.53x sitting near the top of its historical band. The PS ratio of 2.78x is actually below the historical range of 5.72x to 11.78x seen over the past several years, though this discrepancy reflects changes in share count and reporting rather than a true valuation discount. The forward PE of 25.16x is more moderate and closer to the middle of the historical range, suggesting that on a forward basis, RTX is not excessively valued relative to its own history. The market appears to be pricing in optimistic but achievable expectations for margin expansion and backlog conversion, and the PEG below 1.0 provides some valuation support at current levels.
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 primarily from its tight liquidity and execution demands. The current ratio of 1.03 provides minimal short-term buffer, and the debt-to-equity ratio of 0.61, while manageable, leaves limited room for error if cash flow deteriorates. Free cash flow of $8.36 billion TTM is strong, but Q1 2026 FCF of $1.21 billion was down from $3.20 billion in Q4 2025, reflecting seasonality and potentially rising working capital needs. The payout ratio of 53.09% means dividends consume over half of earnings, constraining flexibility for reinvestment or debt reduction if margins compress. Additionally, the company's revenue is concentrated in aerospace and defense, making it vulnerable to cyclical downturns or defense budget cuts.
Market and competitive risks include valuation compression and sector rotation. RTX trades at a trailing PE of 36.53x, near its historical high of 37.89x, and a premium to the sector's typical forward multiple. With a beta of 0.287, RTX is less sensitive to market swings, but the recent -11.26% monthly decline despite low beta indicates stock-specific headwinds, possibly from profit-taking or competitive concerns. GE Aerospace's acquisition of CPP to expand castings capacity could intensify supply chain competition, while defense supply shortages amid geopolitical tensions (e.g., Iran) may benefit RTX but also invite regulatory scrutiny. The wide analyst target range ($200-$265) underscores uncertainty about the appropriate multiple, and any macro-driven rotation out of defensives could pressure the stock.
The worst-case scenario involves a combination of margin compression, backlog conversion delays, and multiple contraction. If operating margins revert to the 9.94% level seen in Q2 2025 and the trailing PE compresses to its historical low of 18.95x, the stock could fall toward its 52-week low of $155.64, representing a 21.3% decline from the current price of $197.68. The analyst low target of $200 offers little downside protection, but a more severe scenario could see the stock test the 52-week low if earnings disappoint and the market re-rates the sector. Given the maximum drawdown of -19.32% over the past period, a similar or larger drawdown is plausible, implying a potential loss of 20-25% from current levels in an adverse scenario.
FAQ
The key risks include: 1) Financial risk from tight liquidity (current ratio 1.03) and a high payout ratio (53.09%), which could constrain flexibility if earnings decline; 2) Execution risk in converting the $289 billion backlog amid supply chain challenges, which could delay revenue recognition; 3) Valuation risk, as the trailing PE of 36.53x is near historical highs and could compress if growth disappoints; and 4) Macro risk from defense budget cuts or a commercial aerospace slowdown, though the low beta of 0.287 provides some insulation. The most severe risk is a margin reversal, which could trigger a 20-25% drawdown.
The 12-month forecast includes three scenarios: bull case (30% probability) targeting $250-$265, base case (50%) targeting $225-$245, and bear case (20%) targeting $155-$200. The base case is most likely, assuming revenue growth of 8% and operating margin expansion to 12%, leading to a price near the analyst average target of $234.82. The bull case requires accelerated backlog conversion and multiple expansion, while the bear case assumes margin compression and defense budget cuts. The key assumption behind the base case is that RTX continues its current trajectory without major disruptions.
RTX's trailing PE of 36.53x is near its historical high, suggesting the stock is overvalued on a trailing basis. However, the forward PE of 25.16x is more moderate and closer to the middle of its historical range, implying the market expects significant earnings growth. The PEG ratio of 0.91, below 1.0, indicates the stock is undervalued relative to its growth rate. Compared to peers, RTX trades at a premium, but its superior margin expansion justifies this. The market appears to be pricing in optimistic but achievable expectations for backlog conversion and margin improvement.
From a risk/reward perspective, RTX appears attractive for long-term investors. The stock trades at $197.68, with analysts' average target of $234.82 implying 18.8% upside, and the PEG ratio of 0.91 suggests undervaluation relative to growth. The biggest downside risk is a margin stall that could push the stock toward its 52-week low of $155.64, representing a 21% decline. However, the $289 billion backlog and improving operating margins (11.57% in Q1 2026) provide a strong foundation. For those with a medium-to-long-term horizon, the current pullback may be a good buying opportunity, but near-term volatility could persist.
RTX is better suited for long-term investment due to its multi-year backlog visibility, stable dividend (yield 1.45%), and low beta (0.287) that reduces portfolio volatility. The company's growth stage is mature, with steady revenue growth and improving margins, making it ideal for investors seeking consistent returns rather than quick gains. Short-term trading is less advisable given the recent 11.26% monthly decline and potential for further volatility. A minimum holding period of 2-3 years is recommended to fully realize the benefits of backlog conversion and margin expansion, aligning with the average analyst target timeline.
