Key Takeaways for RTX Stock
- RTX Corporation posted Q1 revenue of $22.1 billion, up 9% year-over-year on an adjusted basis.
- Operating income reached $2.91 billion in Q1, up 21% year-over-year, with operating margins expanding to 13%.
- Raytheon’s segment operating profit grew 25% year-over-year, with margins expanding 150 basis points to 12%.
- TIKR’s model values RTX stock at approximately $218 by December 2030, implying around 19% total return from the current price of $184.
RTX Stock Posts 10% Organic Growth in Q1 as Defense and Aftermarket Drive Operating Leverage
RTX Corporation (RTX) delivered Q1 2026 results that positioned the aerospace and defense giant at the intersection of two simultaneous demand cycles, with the company reporting $22.1 billion in adjusted revenue and an adjusted EPS of $1.78 that beat consensus estimates by 17%.
RTX operates through three segments: Collins Aerospace, which makes avionics, electric power systems, and aircraft components; Pratt & Whitney, which manufactures commercial and military jet engines; and Raytheon, which produces missile systems, radars, and integrated air defense platforms.
The top-line growth was balanced across all three channels, with commercial aftermarket sales up 14%, defense sales up 9%, and commercial original equipment up 6%.
Raytheon drove the headline story, booking $6.6 billion in new awards and ending the quarter with a record $271 billion companywide backlog, up 25% year-over-year.
CEO Chris Calio pointed to productivity gains as the mechanism behind the margin expansion, noting that RTX grew organic sales double digits with only a 1% increase in headcount.
Calio framed the productivity story directly on the Q1 earnings call: “We grew organic sales and segment profit double digits with only a 1% increase in head count.”
Calio also confirmed that framework agreements with the Department of War covering Tomahawk, AMRAAM, and the Standard Missile family, representing production visibility stretching well beyond today’s backlog, are not yet reflected in that $271 billion figure.
On the commercial side, GTF engine MRO output at Pratt & Whitney rose 23% year-over-year, while aircraft-on-ground counts for the PW1100 fleet fell 15% from the end of last year, signaling continued progress on the fleet management program that has weighed on Pratt margins for two years.
RTX raised its full-year adjusted EPS outlook to a range of $6.70 to $6.90, up $0.10 on both ends, and lifted its adjusted sales guidance by $500 million to a range of $92.5 billion to $93.5 billion.
RTX’s Operating Margin at 13% Signals a Cost Structure Starting to Bend in the Right Direction
RTX posted gross profit of $4.59 billion in Q1, extending a run of year-over-year expansion that has held for six consecutive quarters.
Operating margins reached 13% in Q1, the highest reading in the eight-quarter income statement window and the first confirmation that the cost structure is translating defense volume into durable profitability.
The driver is cost discipline, not just demand: total operating expenses fell to $1.68 billion in Q1, their lowest level in five quarters, even as revenue continued to compound.
SG&A of $1.12 billion came in below the prior-year quarter’s $1.23 billion, evidence that RTX is absorbing a production ramp without proportional overhead growth.
Revenue grew 9% year-over-year in Q1, while operating income grew 21%, a spread that is the clearest income statement argument for RTX stock at the current price.
RTX Leads LMT and LHX on Operating Margins, but Northrop’s Consistency Sets the Competitive Benchmark
RTX posted an operating margin of 13% in Q1 2026, overtaking both L3Harris Technologies (LHX) at 12% and Lockheed Martin Corporation (LMT) at 11% and closing the eight-quarter gap that had kept the company at the bottom of this peer group as recently as mid-2024.
Meanwhile, Northrop Grumman (NOC) has held operating margins above 12% in seven of the eight quarters tracked, establishing a consistency floor that RTX has now matched but not yet sustained across multiple periods.
The most significant competitive development in the chart is LHX, which printed 4% operating margins in two separate quarters before recovering to 12% in Q1 2026, suggesting that margin volatility at the program mix level remains a peer-level risk RTX has so far avoided.
RTX’s trajectory from 9% in Q2 2024 to 13% in Q1 2026 represents the steepest improvement of any company in this peer set over the period, which is the income statement condition that makes the operating leverage thesis competitive rather than merely internal.
Is RTX Stock Undervalued in 2026? TIKR’s $218 Target Says Yes, If the Operating Leverage Holds
TIKR’s model values RTX at approximately $218 by December 2030, implying around 19% total return from the current price of $184, or roughly 4% per year.
That target rests on the thesis established in the income statement: operating income growing faster than revenue is the structural condition that makes the model credible, and the Q1 spread of 9% revenue growth against 21% operating income growth is the first hard data point in that direction.
The risk is that tariff costs, which management flagged as a year-over-year headwind in Q1, re-accelerate and compress the operating expense progress before the defense production ramp fully absorbs them.
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