RTX Corporation is a $260.85 billion aerospace and defense conglomerate operating three segments — Collins Aerospace, Pratt & Whitney, and Raytheon — serving commercial aviation, military, and government customers worldwide with 180,000 employees.
High QualityA-tier business, C-tier valuation on historical multiples but B-tier on blended fair value with 33% upside.CheapBelow buy zone — at a discount
RTX is 36% below fair value, trading below its buy zone — an even more attractive entry for accumulation.
QuantHub Research: Investment Thesis
Scaling Phase
RTX Corporation is a $260.85 billion aerospace and defense conglomerate operating three segments — Collins Aerospace, Pratt & Whitney, and Raytheon — serving commercial aviation, military, and government customers worldwide with 180,000 employees. The business quality is high: it holds intangible-asset and switching-cost advantages rooted in long-cycle engine programs, proprietary defense electronics, and decades-long aftermarket service relationships, evidenced by a 14.5% revenue increase and 29.1% earnings increase in the most recent quarter, an 11.8% return on equity, and $8.91 in free cash flow per share. At $193.54, the shares trade at 33.75 times trailing earnings, 21.73 times free cash flow, and 18.13 times EV/EBITDA — a very expensive regime relative to the company's own five-year history — yet the blended fair value estimate of $257.36 implies 33.0% upside, and the analyst consensus target of $238.50 implies 23.2% upside. The market appears to be pricing the historical multiple premium and lingering Pratt & Whitney GTF durability concerns more heavily than the demonstrated double-digit top- and bottom-line momentum, leaving the shares undervalued versus blended fair value even as they screen rich against their own past multiples.
RTX trades at 33.75 times trailing earnings, 21.73 times free cash flow, and 18.13 times EV/EBITDA, placing it in a very expensive regime relative to its own five-year history — the prior risk register flagged the stock trading roughly 25% above its historical average. That historical-multiple premium is the main reason the shares look expensive on a backward-looking lens. However, the blended fair value estimate of $257.36 implies 33.0% upside from $193.54, and the analyst consensus Buy rating with a $238.50 average target implies 23.2% upside, so on a forward blended basis the shares are undervalued. The gap reflects a market that is discounting the 14.5% most-recent-quarter revenue growth and 29.1% most-recent-quarter earnings growth against GTF engine durability overhang, defense budget uncertainty, and tariff and supply-chain friction. The most recent trading session saw the stock close at $193.54, down 1.67%, suggesting near-term sentiment remains soft even as fundamentals accelerate.
12–18 Month Outlook
In 18 months, RTX should be a larger, cash-generative aerospace and defense platform if the most recent quarter's trajectory holds: revenue grew 14.5% and earnings grew 29.1% year over year, and free cash flow per share of $8.91 supports continued deleveraging and shareholder returns. The central question is whether the market closes the gap between the $193.54 price and the $257.36 blended fair value, which would require either multiple expansion or further earnings delivery. The very expensive historical-multiple regime is the key risk to that path: if growth decelerates or GTF durability costs escalate, the stock could re-rate toward its five-year average and surrender the 33.0% upside to blended fair value. Defense budget outcomes and tariff and supply-chain conditions will determine whether the Raytheon and Collins segments sustain their contribution. Net, the fundamentals point higher, but the valuation regime means the margin for error is thin.
Bull vs Bear
Bull Case
Most-recent-quarter revenue grew 14.5% year over year and earnings grew 29.1% year over year, demonstrating that the three-segment portfolio is converting top-line momentum into disproportionate bottom-line expansion.
Free cash flow per share of $8.91 against a $193.54 share price gives a 21.73 times P/FCF multiple that is supported by a business with an 11.8% return on equity and a 20.3% trailing gross margin.
The blended fair value estimate of $257.36 implies 33.0% upside, and the analyst consensus Buy rating with a $238.50 average target implies 23.2% upside, giving two independent valuation anchors above the current price.
Pratt & Whitney's engine franchise and Collins Aerospace's aftermarket and interior systems businesses generate long-duration service revenue tied to installed fleets, and Raytheon's detection, tracking, and mitigation portfolio serves the U.S. government and allied foreign governments.
The company operates at scale with 180,000 employees across commercial aerospace, defense electronics, and propulsion, a footprint that few competitors can replicate and that supports multi-decade program participation.
Bear Case
The stock trades in a very expensive regime versus its own five-year history, and the prior risk register noted it was roughly 25% above its historical average, exposing investors to a valuation re-rating if growth or margin expectations are not met.
Ongoing Pratt & Whitney GTF engine durability problems have driven customer compensation and retrofit costs, with potential legal exposure and cash flow impact that remains unresolved in the current research.
Changes or cuts in U.S. and allied defense spending could reduce contract awards and backlog, pressuring revenue and margins at the Raytheon segment.
Tariffs and export controls could raise costs and disrupt supply chains, while broader global supply chain disruptions could delay production and increase costs, impacting margins and delivery schedules.
The company's large-scale, multi-segment operations carry integration and execution risk that could affect operational efficiency and the pace of margin improvement.
Leadership & Competitive Position
Christopher T. Calio
Tenure3 yrs
Beats guidance75% of qtrs
Capital allocationGood
Christopher T. Calio leads RTX Corporation as CEO, having taken the helm of the Arlington, Virginia-based aerospace and defense company following its rebranding from Raytheon Technologies Corporation in July 2023. He oversees a 180,000-employee organization spanning Collins Aerospace, Pratt & Whitney, and Raytheon, and his tenure has coincided with the most recent quarter's 14.5% revenue growth and 29.1% earnings growth. The current research does not disclose his insider ownership percentage or a quantified guidance-beat history.
Competitive Moat
stable
intangible assetsswitching costs
RTX is described as a major player in the aerospace and defense sectors, with Pratt & Whitney characterized as a leading provider of aircraft propulsion systems for commercial airliners, military aircraft, business jets, and general aviation, and Collins Aerospace serving aircraft manufacturers, commercial airlines, and regional, business, general aviation, defense, and commercial space operators. The current research does not provide specific percentage market share figures.
Competitors: General Electric (GE), Boeing (BA), Lockheed Martin (LMT), Northrop Grumman (NOC)
Disruption: Medium, because the Pratt & Whitney GTF engine durability issues represent a technical and financial challenge to a core propulsion franchise, and defense budget shifts could alter program economics, though the installed-base service model and proprietary defense electronics provide meaningful insulation.
QuantHub Research
Valuation
Multiple
Current
Median 3yr
Median 5yr
Min 5yr
Max 5yr
P/E
33.75x
36.53x
33.49x
28.67x
37.56x
P/S
2.79x
1.91x
2.01x
1.74x
2.78x
P/FCF
21.73x
30.98x
30.98x
25.44x
34.0x
P/S 2.79x vs 5yr range 1.74-2.78x (P25=1.74x, median=2.01x, P75=2.22x)
Price Outlook (5-Year)
Bear
$206
1.7%/yr
Base
$257
6.3%/yr
fair value
Bull
$309
10.3%/yr
Bear/Base/Bull anchored to QuantHub fair value estimate. Base = headline fair value; Bear −20%; Bull +20%.
Ongoing technical problems with Pratt & Whitney GTF engines have led to customer compensation and retrofit costs, with potential legal exposure and cash flow impact that current research does not indicate has been resolved.
Defense Budget Uncertainty
high
Changes or cuts in U.S. and allied defense spending could reduce contract awards and backlog, pressuring revenue and margins at the Raytheon segment.
Valuation Re-rating Risk
medium
The stock trades in a very expensive regime versus its five-year history, and the prior risk register noted it was roughly 25% above its historical average, exposing investors to downside if growth or margin expectations are not met.
Tariffs and Trade Regulations
medium
Tariffs and export controls could increase costs and disrupt supply chains, negatively affecting earnings and cash flow.
Supply Chain Disruptions
medium
Global supply chain issues could delay production and increase costs, impacting margins and delivery schedules.
Integration and Execution Risks
low
The company's large-scale operations and multiple segments may face integration challenges, affecting operational efficiency.
Growth Engines
Commercial aftermarket servicesmature
Collins Aerospace and Pratt & Whitney provide spare parts, overhaul and repair, engineering assistance, training, and fleet management to a global installed base of commercial airlines and aircraft operators.
GTF engine programscaling
Pratt & Whitney's propulsion systems serve commercial airliners, military aircraft, business jets, and general aviation, with auxiliary power units for military and commercial applications, though durability retrofit costs are a current drag.
Defense electronics and effectorsmature
Raytheon delivers detection, tracking, and mitigation capabilities for defensive and offensive threats to the U.S. government, foreign governments, and commercial customers.
Aircraft interiors and systemsmature
Collins Aerospace supplies oxygen systems, galley systems, lavatories, wastewater management, crew escape mechanisms, simulation and training, and battlespace management tools.
RTX shares close at $193.54, down 1.67% in the most recent session
The decline came as the broader market gained, indicating company-specific or sector-specific softness even as the stock sits 33.0% below the blended fair value estimate of $257.36.
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QuantHub research is focused on quality businesses with durable competitive advantages — companies we'd want to own for 3–5 years or more. We are not short-term traders. Every analysis is built around a single question: is this a great business available at a reasonable price for a long-term investor?
We start where most analysts finish: the fundamentals. For every company, our AI ingests years of financial statements — revenue, margins, free cash flow, and how the business has been valued by the market across multiple cycles. But numbers alone don't tell you whether a business is worth owning.
The harder work is qualitative. We assess the competitive moat: is it widening or eroding? We read the leadership track record — how capital has been allocated, whether management has earned trust through consistent execution. We look at what the market is afraid of, and whether that fear is priced in fairly or irrationally.
Valuation is always relative. A stock is cheap or expensive compared to its own history. We build scenario matrices anchored to 5-year historical multiples, then ask: what has to go right for the upside case, and what's the floor if it doesn't?
Finally, we write an 18-month forward outlook — not a price target, but a mental model of where this business will be and what the narrative will look like. Every note is dated and versioned. When material facts change, we update the thesis.
Frequently Asked Questions
Is RTX undervalued?
Yes, RTX appears undervalued at the current price of $189.40, trading below our fair value estimate of $257.36 (+36% upside). QuantHub considers this a buy zone.
What is RTX's fair value?
QuantHub Research estimates RTX's fair value at $257.36 based on our proprietary valuation model incorporating historical P/S, P/E, and P/FCF multiples over a 5-year range.
What are the key risks for RTX?
GTF Engine Durability Issues: Ongoing technical problems with Pratt & Whitney GTF engines have led to customer compensation and retrofit costs, with potential legal exposure and cash flow impact that current research does not indicate has been resolved. Defense Budget Uncertainty: Changes or cuts in U.S. and allied defense spending could reduce contract awards and backlog, pressuring revenue and margins at the Raytheon segment. Valuation Re-rating Risk: The stock trades in a very expensive regime versus its five-year history, and the prior risk register noted it was roughly 25% above its historical average, exposing investors to downside if growth or margin expectations are not met.
What is the bull case for RTX?
Most-recent-quarter revenue grew 14.5% year over year and earnings grew 29.1% year over year, demonstrating that the three-segment portfolio is converting top-line momentum into disproportionate bottom-line expansion. Free cash flow per share of $8.91 against a $193.54 share price gives a 21.73 times P/FCF multiple that is supported by a business with an 11.8% return on equity and a 20.3% trailing gross margin. The blended fair value estimate of $257.36 implies 33.0% upside, and the analyst cons
How confident is QuantHub in RTX?
QuantHub has moderate conviction in RTX. Research last updated 2026-09-18.