Key Stats for RTX Corporation Stock
- Past-6-Month Performance: 28%
- 52-Week Range: $112 to $206
- Valuation Model Target Price: $233
- Implied Upside: 17%
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What Happened?
RTX Corporation stock has surged about 28% over the last 6 months, recently trading near $200 per share as investors gained confidence in accelerating aerospace demand, defense backlog growth, and improving free cash flow generation.
The stock climbed primarily because earnings growth accelerated and backlog reached record levels, improving visibility into 2026 revenue and cash flow.
Investors responded to stronger commercial aerospace volumes, expanding defense orders, and clear guidance that sales and margins are set to rise again next year.
In its most recent quarter, RTX reported adjusted Q4 sales of $24.2 billion, up 14% organically, adjusted EPS of $1.55, and free cash flow of $3.2 billion.
For the full year, adjusted sales reached $88.6 billion, and backlog climbed 23% to a record $268 billion on a 1.56 book-to-bill ratio.
CEO Chris Calio said, “We delivered strong sales, adjusted EPS and free cash flow in the fourth quarter,” while management guided 2026 sales to $92 billion to $93 billion and EPS to $6.60 to $6.80.
Defense demand remains structurally strong, supported by rising munitions output and expanding international awards. Commercial aerospace has also continued recovering, with higher global flight hours driving aftermarket growth at Pratt & Whitney and Collins Aerospace.
Management expects 5% to 6% organic sales growth in 2026, with margin expansion driven by higher volumes, pricing, and productivity initiatives.
RTX generated $7.9 billion in free cash flow in 2025 and expects between $8.25 billion and $8.75 billion in 2026.
That level of cash generation supports debt reduction, capacity expansion, and shareholder returns, reinforcing confidence in the company’s earnings durability even as the stock trades near recent highs.
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Is RTX Corporation Undervalued?
Under valuation assumptions, the stock is modeled using:
- Revenue Growth (CAGR): 8.0%
- Operating Margins: 14.0%
- Exit P/E Multiple: 23.5x
Revenue growth is supported by sustained defense backlog conversion and a multi-year aerospace recovery.
Commercial OE deliveries at Pratt & Whitney are increasing, global flight hours continue to expand, and higher-margin aftermarket revenue is scaling across the installed base.
Defense remains a long-term growth pillar. With a $268 billion backlog and increasing international exposure, RTX benefits from elevated global defense spending, missile system replenishment, and expanded production capacity across programs such as Patriot, AMRAAM, and Tomahawk.
Operating margin expansion toward 14% reflects productivity improvements, better program mix, and normalization of prior engine-related headwinds. Continued GTF durability upgrades, higher MRO output, and rising munitions production volumes remain key drivers of incremental earnings growth.
Based on these inputs, the model estimates a target price of $233, implying about 16.5% total upside over roughly 2.9 years, or approximately 5.4% annualized returns.
At around $200 per share, RTX appears modestly undervalued, with future performance likely driven by backlog execution, margin expansion, and strong free cash flow generation rather than rapid revenue acceleration.
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