RTX Corporation is a leading aerospace and defense company with a diversified portfolio spanning Pratt & Whitney jet engines, Collins Aerospace avionics, and Raytheon Intelligence & Space defense systems.
RTX is 21% above fair value. Patience may be rewarded.
QuantHub Research: Investment Thesis
Scaling Phase
RTX Corporation is a leading aerospace and defense company with a diversified portfolio spanning Pratt & Whitney jet engines, Collins Aerospace avionics, and Raytheon Intelligence & Space defense systems. The company benefits from a strong competitive moat supported by a $271 billion backlog and multi-year contracts, driving consistent revenue growth of 10% in 2025 and 9% in Q1 2026. Earnings growth outpaces revenue growth, with adjusted EPS rising 21% year-over-year in Q1 2026, reflecting operational leverage and margin expansion. Despite these strengths, RTX trades at a premium valuation with a P/E of 32.12 and EV/EBITDA of 19.19, well above its five-year historical range, resulting in a fair value estimate of $136.05 versus a current price of $172.90, indicating 21.3% downside risk. The stock is overvalued due to high multiples and risks including supply chain disruptions and Pratt & Whitney engine issues, suggesting caution despite strong fundamentals and growth prospects.
RTX is expensive due to a premium valuation driven by strong earnings growth and margin expansion, reflected in a P/E of 32.12 and EV/EBITDA of 19.19, which are above historical averages. Analyst consensus remains positive with a buy rating, but the stock trades over 20% above fair value at $172.90 versus a $136.05 fair value estimate. The market prices in continued growth and defense spending tailwinds, but risks such as supply chain bottlenecks and engine recalls temper enthusiasm, leading to a valuation that implies downside risk rather than upside.
12–18 Month Outlook
In 18 months, RTX is expected to continue scaling revenue with organic growth around 5-6% and adjusted EPS growth supported by margin expansion. However, the stock currently trades over 20% above fair value, implying downside risk if supply chain issues or geopolitical uncertainties impact execution. The strong backlog and raised guidance support stable cash flow, but valuation compression is a key risk.
Bull vs Bear
Bull Case
RTX has a robust $271 billion backlog providing strong revenue visibility and multi-year contract stability.
The company achieved 10% total revenue growth in 2025 and 9% growth in Q1 2026, demonstrating consistent scaling momentum.
Adjusted EPS grew 21% year-over-year in Q1 2026, indicating strong operational leverage and margin improvement.
Pratt & Whitney segment revenue grew 17.3% in 2025, driven by commercial aviation recovery and defense demand.
Management raised 2026 guidance for sales and EPS, reflecting confidence in continued growth and cash flow generation.
Bear Case
RTX trades 21.3% above its fair value estimate, exposing investors to significant downside risk if growth slows or risks materialize.
Supply chain disruptions, particularly in engines and electronics, pose a 70% probability risk to timely contract execution and margins.
Geopolitical uncertainty and regulatory scrutiny could lead to contract delays or margin volatility in defense segments.
Cost inflation and macroeconomic weakness could pressure commercial aerospace demand and overall profitability.
Leadership & Competitive Position
Christopher T. Calio
Beats guidance75% of qtrs
Capital allocationFair
Christopher Calio has extensive internal experience with RTX and its predecessor UTC, having served in key leadership roles including President of Pratt & Whitney and COO before becoming CEO in 2024. His background includes managing major segments and operations for over 185,000 employees, providing stability and continuity post-merger. However, detailed capital allocation metrics such as buybacks or dividend growth are not available.
Competitive Moat
stable
intangible assetscost advantagebrand
RTX is the second-largest defense firm by sales, with $68.9 billion in 2023 revenue and a $202 billion backlog, trailing only Lockheed Martin. It holds leading positions in jet engines, avionics, and missile systems but lacks specific market share data in key segments.
Competitors: Lockheed Martin (LMT), Northrop Grumman (NOC)
Disruption: Low due to high barriers to entry, long-term contracts, and specialized technology in aerospace and defense.
QuantHub Research
Valuation
Multiple
Current
Median 3yr
Median 5yr
Min 5yr
Max 5yr
P/E
32.12x
28.63x
28.63x
19.34x
303.79x
P/S
2.58x
1.73x
1.77x
1.25x
2.58x
P/FCF
27.86x
10.7x
11.58x
3.79x
84.39x
P/S 2.58x vs 5yr range 1.25-2.58x (P25=1.56x, median=1.77x, P75=1.98x)
Earnings results will provide updated guidance and insight into supply chain resolution and margin trends.
high
2026-Q3
Defense Contract Awards
New multi-year defense contracts could bolster backlog and revenue visibility.
medium
2026-Q4
Pratt & Whitney GTF Engine Recall Resolution
Successful resolution of engine issues would reduce risk and improve operational stability.
medium
Risks
Supply Chain Disruptions
high
There is a 70% probability of supply chain bottlenecks, particularly in engines and electronics, which could delay contract execution and increase costs.
Pratt & Whitney Engine Issues
high
Ongoing recalls affecting 835 aircraft pose reputational and financial risks, potentially impacting margins and customer relationships.
Geopolitical Uncertainty
medium
Defense spending volatility and regulatory scrutiny amid global tensions could affect contract awards and profitability.
Cost Inflation
medium
Rising input costs may pressure operating margins, especially if not fully passed through to customers.
Valuation Risk
medium
The stock trades over 20% above fair value, exposing investors to downside if growth or margin expansion disappoints.
Growth Engines
Pratt & Whitney Enginesscaling
The commercial and military jet engine market benefits from strong commercial aviation recovery and sustained defense spending, supporting growth in Pratt & Whitney's segment.
Collins Aerospace Systemsscaling
Serving commercial aerospace, defense, and aftermarket segments, Collins Aerospace benefits from aircraft production recovery and increasing maintenance demand.
Raytheon Intelligence & Spacemature
Focused on defense and intelligence markets, this segment is supported by geopolitical tensions and increased defense budgets globally.
Q1 2026 Earnings Beat with 21% Adjusted EPS Growth
RTX reported $22.1 billion in sales, up 9% year-over-year, and raised full-year guidance, demonstrating strong operational performance and growth momentum.
2026-03-15
Secured $206 Million Navy GPS Contract and $370 Million Engine Modification
These contracts strengthen RTX's defense backlog and support multi-year revenue visibility.
2026-02-10
Record Backlog Reaches $271 Billion
The backlog growth underscores strong demand and contract wins across all segments, supporting future revenue streams.
2026-01-05
Stock Surges 4.33% on Geopolitical Tensions and Boeing Aircraft Order
Market optimism rose due to increased defense spending prospects and indirect benefits from Boeing's $4.9 billion aircraft order.
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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?
RTX is currently significantly overvalued at $172.90 vs. our fair value estimate of $136.05 (-21% upside).
What is RTX's fair value?
QuantHub Research estimates RTX's fair value at $136.05 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?
Supply Chain Disruptions: There is a 70% probability of supply chain bottlenecks, particularly in engines and electronics, which could delay contract execution and increase costs. Pratt & Whitney Engine Issues: Ongoing recalls affecting 835 aircraft pose reputational and financial risks, potentially impacting margins and customer relationships. Geopolitical Uncertainty: Defense spending volatility and regulatory scrutiny amid global tensions could affect contract awards and profitability.
What is the bull case for RTX?
RTX has a robust $271 billion backlog providing strong revenue visibility and multi-year contract stability. The company achieved 10% total revenue growth in 2025 and 9% growth in Q1 2026, demonstrating consistent scaling momentum. Adjusted EPS grew 21% year-over-year in Q1 2026, indicating strong operational leverage and margin improvement. Pratt & Whitney segment revenue grew 17.3% in 2025, driven by commercial aviation recovery and defense demand. Management raised 2026 guidance for sales and