RTX is three businesses: Raytheon missiles and air defense, Pratt & Whitney jet engines and Collins aircraft parts. Its backlog is a record $340 billion, and it raised 2026 guidance again this week. Of the primes it is the one most exposed to commercial air travel, and its missiles face Anduril’s cheaper ones.
Today’s close against the report’s numbers, updated every weekday. The analysis is as of October 22, 2026; the rating as of October 23, 2026. Both change only when the report is revised.
The cash-flow model’s bear-to-bull range, the probability-weighted value, the price, its 52-week range and the analysts’ average target. The copper line marks the base case; the fine dotted line is today’s close.
Written on October 22, 2026, after its third-quarter results. Figures are from the company’s filings and releases unless noted. Not investment advice. The author holds no RTX shares directly.
Raytheon makes Patriot air defense, the Standard Missile family, AMRAAM, Tomahawk and the Coyote counter-drone interceptor. Pratt & Whitney makes the GTF engine for the Airbus A320neo family and the F135 for the F-35. Collins Aerospace makes avionics, seats, landing gear and other parts for airliners and military aircraft.
About half of sales are commercial. That makes RTX the prime most tied to airline traffic and aftermarket parts, and the least dependent on U.S. defense budgets alone.
Third-quarter sales rose 11% (12% organic) to $25.0 billion. Adjusted earnings rose 33% to $2.26 a share, including $0.25 from recovering tariff costs (IEEPA cost recovery, as RTX calls it); reported earnings were $1.89. Collins earned a 21.3% margin and Raytheon 14.1%. Pratt & Whitney earned 6.6% as reported and 10.5% adjusted, the gap being items RTX excludes from adjusted results.
Backlog reached $340 billion, $164 billion of it defense. RTX raised 2026 guidance to sales of $97.0–97.5 billion, adjusted earnings of $7.65–7.75 a share and free cash flow of $9.0–9.2 billion.
Anduril, valued at about $90 billion this month, sells exactly the kind of low-cost weapons that sit next to Raytheon’s: the Roadrunner reusable interceptor against drones, and the Barracuda low-cost cruise missile. Raytheon’s own Coyote interceptor competes in the same counter-drone market. The high end, Patriot, Standard Missile and AMRAAM, is protected by years of qualification and some of the largest multi-year production deals the Pentagon has signed.
| Market | Where RTX stands | How exposed |
|---|---|---|
| Counter-drone interceptors | Coyote in production; competes with Anduril Roadrunner | High: a new market where new entrants start level |
| Low-cost cruise missiles | Tomahawk is the high end; Anduril Barracuda is built to be cheaper and faster to make | Medium |
| Air and missile defense | Patriot, Standard Missile, AMRAAM: sole or main producer, long production deals | Low |
| Engines and aircraft parts | Pratt & Whitney and Collins, about half of sales | None: no defense start-up competes here |
RTX is less exposed than Northrop overall, because half its business is commercial aerospace. Where it does compete with Anduril, in cheap interceptors and missiles, it is the Pentagon’s new money that is contested, not the existing backlog.
| FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | TTM Sep 2026 | |
|---|---|---|---|---|---|---|
| Revenue | $64.4B | $67.1B | $68.9B | $80.7B | $88.6B | $96.0B |
| Operating margin | 8.0% | 8.2% | 5.2% | 8.1% | 10.5% | 11.8% |
| Net income | $3.9B | $5.2B | $3.2B | $4.8B | $6.7B | $8.4B |
| Operating cash flow | $7.1B | $7.2B | $7.9B | $7.2B | $10.6B | $12.4B |
| Capital spending | $2.1B | $2.3B | $2.4B | $2.6B | $2.6B | $2.9B |
| Free cash flow | $5.0B | $4.9B | $5.5B | $4.5B | $7.9B | $9.5B |
The operating margin fell to 5% in 2023 when RTX took a charge of about $2.9 billion for inspections of GTF engines made with contaminated powder metal; that problem is still keeping some A320neo aircraft on the ground. Since then the margin has recovered every year. The quarterly view shows each quarter.
At the end of September RTX had $9.2 billion of cash and $37.4 billion of debt, about $28.2 billion of net debt, down from about $30 billion at the start of the year. There are about 1.37 billion diluted shares. Free cash flow guidance of about $9.1 billion this year is roughly 9% of sales.
| Assumption | Base case | Basis |
|---|---|---|
| Sales, 2026 | $97.25B | Guidance midpoint |
| Growth, 2027 and 2028 | 8%, then 7% | Record backlog; fades to 3% by year 10 |
| Operating margin | 12.5% rising to 14% | Segment margins less corporate costs (estimate); GTF costs roll off |
| Reinvestment | $1 for every $3 of new sales | Engine and munitions capacity |
| Discount rate | 8.2% | Beta 0.80 for defense peers, 12% debt |
| Terminal growth | 3.0% | With a 15% return on new capital |
| Bear | Base | Bull | |
|---|---|---|---|
| Growth, 2027 / 2028 | 4% / 4% | 8% / 7% | 10% / 9% |
| Long-run operating margin | 12% | 14% | 15.5% |
| Discount rate | 9.2% | 8.2% | 7.2% |
| Value per share | $86 | $146 | $229 |
| Probability | 25% | 50% | 25% |
Weighted 25/50/25: $152. The bear case is an air-travel slowdown hitting the aftermarket plus a budget squeeze after the midterms; the bull case is the munitions ramp and engine margins recovering faster.
| Discount rate | 7.0% | 7.5% | 8.0% | 8.5% | 9.0% |
|---|---|---|---|---|---|
| Value per share | $194 | $171 | $152 | $136 | $123 |
Every figure in this valuation comes from one model script, rerun and checked against this page each time the site is built. The XLSX model rebuilds it in live formulas: change any blue input and every year’s cash flow, the bridge to the value, the scenarios and the sensitivity table recalculate.
| To justify the price, you need | Against |
|---|---|
| Sales growth of about 14% a year for two years, then the same fade | 8% and 7% |
| Or a long-run operating margin of about 18% | 14% |
| Or a discount rate of about 7.0% | 8.2% |
The price sits above the model’s base case, as it does for most large companies on this method; analysts average about $227. The shares are down about 14% from their high, in part because investors began pricing in a Democratic Congress after the November 3 midterms.
| Risk | Why it matters |
|---|---|
| Air travel | Half the business depends on airline flying and the aftermarket for parts and engine overhauls. |
| The GTF engine | Inspections and compensation to airlines are still costing money. |
| Budgets and politics | A Democratic Congress could trim the defense increase. |
| New entrants | Anduril and others are going after cheap interceptors and missiles. |
| Fixed-price contracts | Raytheon has taken charges on fixed-price development work before. |
Upside: munitions multi-year deals, Patriot exports to Europe and the Gulf, and GTF costs falling away faster.
RTX has a record $340 billion backlog, raised guidance again in October, and gets about half its sales from commercial aerospace, which no defense start-up competes in. Where Anduril does compete, in cheap interceptors and cruise missiles, it is new spending at stake rather than the backlog.
What would change the value: January’s 2027 guidance, munitions contract awards and the pace of GTF engine inspections are the next inputs; the midterms on November 3 could change the budget outlook.
Ranges, not three cases. The expected value is the average of 4,000 runs of this report’s own model, with every input drawn from a range: the base case is the middle, and the bear and bull cases are the 10th and 90th percentiles. Business inputs move together; the discount rate moves on its own. The 25/50/25 weighting in the valuation section gives $152. How the ranges work
Two different questions. The rating is relative: it asks whether the stock is cheaper or dearer than the S&P 500 on the same assumptions. The absolute view asks whether it is worth its price at all: on its own the stock trades above our estimated value, which is 24% below the price.
On the same assumptions every report uses (a 5.15% Treasury yield and a 4.5% equity premium), the S&P 500 itself is worth about 68% of its price. The rating compares each stock with that: Buy if it is at least 15% cheaper than the market on this basis, Sell if at least 15% dearer, Hold in between. It is the same rule for every company, whoever owns it. The rating depends on that assumption: it would be Buy if the index grows 6% a year and Hold at 10%, against 8% here. How ratings work
Against the Street: Analysts average about $227 and value RTX on earnings multiples near the sector’s. This model reaches a 14% operating margin by 2031 and discounts at 8.2%; at 7% it matches the price.
| Measure | RTX | Industry median | Rank | |
|---|---|---|---|---|
| Revenue growth, last fiscal year | 9.7% | 10.1% | 8 of 12 | Worse than the median |
| Operating margin | 11.8% | 10.3% | 5 of 12 | Better than the median |
| Price to earnings | 32.0× | 23.1× | 9 of 12 | Worse than the median |
| Free cash flow yield | 3.5% | 3.0% | 6 of 12 | Better than the median |
Peers: the 11 other S&P 500 companies in Aerospace & Defense with complete data (AXON, BA, GD, GE, HII, HWM, LHX, LMT, NOC, TDG, TXT). Last twelve months where reported, from SEC filings; prices from the latest close. A lower price-to-earnings ratio ranks higher. These figures update with each data run; the rating does not.
Cheap new missiles threaten the edges, not the core.
| What | Figures | Source |
|---|---|---|
| Latest results | $25.0B (Sales, Q3 2026, +11%), $2.26 (Adjusted earnings per share, +33%), $2.1B (Free cash flow), $340B (Backlog, a record) and others | Q3 2026 results (8-K) |
| The numbers (five-year table) | Five years of annual figures and the last twelve months | SEC XBRL company facts; latest: 10-K for the period to 2025-12-31, 10-Q for the period to 2026-09-30 |
| Price at writing | $194.75 (Close, Oct 22, 2026) | Yahoo Finance; the time of the quote is stated beside the price |
| Discount rate inputs | 10-year Treasury 5.15%, equity risk premium 4.5% | Fixed for every report so they can be compared; How ratings work |
| Valuation | Every value, case and sensitivity | This site’s model: XLSX, CSV |
| Checked by hand | 14 figures on October 23, 2026 | All match; one term clarified. Audit log |
| Input | Bear (10th percentile) | Base (median) | Bull (90th percentile) |
|---|---|---|---|
| Growth, first forecast year | 4.0% | 8.0% | 10.0% |
| Growth, second forecast year | 4.0% | 7.0% | 9.0% |
| Operating margin, near term | 11.5% | 12.5% | 13.0% |
| Operating margin, long run | 12.0% | 14.0% | 15.5% |
| Discount rate | 9.2% | 8.2% | 7.2% |
| Simulation result | |
|---|---|
| Expected value (average of 4,000 runs) | $147.45 |
| Likely range, 10th to 90th percentile | $102.19 to $196.61 |
| Median | $143.58 |
| Chance the value is above the price | 11% |
| Chance it is cheaper than the S&P 500 | 63% |
Each input is drawn from a split normal: its bear and bull values are the 10th and 90th percentiles, so the two sides can differ. Business inputs share a common factor (correlation 0.6); the discount rate moves on its own. Inputs not listed are held at their base value. How the simulation works.