- Company name
- RTX
- Sector
- Aerospace & defense
- About
- RTX makes aircraft engines, aircraft systems and defense products. It reports three segments of about the same size. Collins Aerospace makes systems for aircraft, such as avionics, landing gear, cabins and power systems. Pratt & Whitney makes engines for commercial and military aircraft, such as the Geared Turbofan (GTF) for the Airbus A320neo and the F135 for the F-35 fighter. Raytheon makes missiles, air defense systems and radars, such as Patriot, Standard Missile and AMRAAM. RTX makes money when it sells new equipment, and it makes more money over many years from spare parts, repairs and service of the engines and systems in use. Its 2025 sales were more than $88 billion, and it has more than 180,000 employees. At June 30, 2026, its backlog was $289 billion: $170 billion commercial and $119 billion defense.
- Thesis
- The market prices RTX lower because it removed part of the war premium from defense stocks and because Pratt & Whitney still carries the cost of the GTF engine problem. The stock rose after the strong Q2 2026 report on July 23, 2026, and then it fell about 10% in the month to September 22, 2026. On that day, a report that Iran offered to reopen the Strait of Hormuz made investors expect less demand for missiles, and RTX fell about 3%. Investors also remember the powder metal problem in the GTF engine. Pratt & Whitney expects more A320neo aircraft on the ground than normal through 2026, and it expects a cash cost of about $0.7 billion for this in 2026. For the gap to close, three things must be true. First, the new multi-year missile contracts must become funded orders and keep defense backlog growing: AMRAAM (up to $20.7 billion), SM-6 (up to $24.4 billion) and SM-3 Block IB (up to $6.3 billion) were awarded from September 25 to October 8, 2026. Second, RTX must deliver its raised 2026 outlook: organic sales growth of 8% to 9% and free cash flow of $8.50 to $8.75 billion. Third, the number of GTF-powered aircraft on the ground must start to fall, and Pratt & Whitney margins must keep rising. The first test is the Q3 2026 report on October 20, 2026. The 2027 outlook with the Q4 2026 report in early 2027 is the second test. If these checks pass, the gap can close over the next two to four quarters. The main risk is that a peace in the Middle East and slower US defense funding reduce the missile orders that the market expects.
- Risks
- Part of the recent demand for missiles comes from the conflict with Iran. A peace or a reopened Strait of Hormuz can reduce the urgency of new orders. The new multi-year contracts give a maximum value, and the US Congress must fund each year of production.
The GTF powder metal problem is not finished. Pratt & Whitney expects more A320neo aircraft on the ground than normal through 2026, and a 2026 cash cost of about $0.7 billion. Inspections, shop visit times and customer talks can make the cost higher. The SEC also investigates the company's 2023 disclosures about this problem, and shareholders have sued.
The US Defense Contract Management Agency claims that Pratt & Whitney charged its research costs to government contracts in a wrong way. The first claim is about $1.7 billion plus $1.6 billion of interest at June 30, 2026, and the second is $1.1 billion plus interest. Pratt & Whitney says that both claims are without merit and has appealed them.
Fixed-price defense contracts and new engine deliveries can lower margins. In Q2 2026, Pratt & Whitney commercial engine sales fell 8% because of the mix of engines, while it delivered more large engines. Supply chain problems can delay deliveries.
Tariffs raise the cost of imported parts. RTX paid about $0.5 billion of IEEPA tariffs that the Supreme Court found unauthorized in February 2026, and it has asked for refunds, but the US government appealed the refund order on June 2, 2026.
- Balance sheet
- Cash: $8.3B
Debt: $37.4B
Net debt: $29.1B
Interest cover: 6.4×
Undrawn credit line: $5.0B, to August 2028
Debt due within 12 months: $5.5B
Ratings: S&P BBB+ (positive outlook), Moody's Baa1 (positive outlook)
RTX funds itself with unsecured notes of the parent company and with cash from its three segments. At June 30, 2026, total debt was $37.4 billion, and total debt was 35% of total capitalization, down from 36% at December 31, 2025. RTX had no commercial paper outstanding at June 30, 2026. It repaid $500 million of notes on February 27, 2026. About 27% of the cash was held by foreign subsidiaries. Interest cover is operating income divided by interest expense for the first half of 2026. In May 2026, S&P changed its outlook to positive, and in February 2026, Moody's changed its outlook to positive. RTX raised its 2026 free cash flow outlook to $8.50 to $8.75 billion on July 23, 2026. The sale of Blue Canyon Technologies for $620 million will add cash when it closes.
As of 2026-06-30.
- Checkpoints
- Oct 20, 2026: Q3 2026 results: defense orders and GTF. Pending. Watch: Organic sales growth near the 8% to 9% outlook, free cash flow on track for $8.50 to $8.75 billion and a higher defense backlog pass; a lower outlook or a new GTF charge fails.
Jan 2027 (estimate): Q4 2026 results: 2027 outlook and GTF fleet. Pending. Watch: A 2027 outlook with sales and free cash flow growth and fewer GTF-powered aircraft on the ground passes; a flat outlook or a GTF fleet plan that slips further into 2027 fails.
- Recent events
- 2026-10-08: Raytheon won a multi-year contract for SM-3 Block IB interceptors, valued at up to $6.3 billion.
2026-10-01: Raytheon won a five-year contract from the US Navy for Standard Missile-6 interceptors, with two option years, valued at up to $24.4 billion.
2026-09-29: RTX said it will report Q3 2026 results on October 20, 2026, before the market opens.
2026-09-28: RTX announced a five-year contract, with two option years, for AMRAAM air-to-air missiles, valued at up to $20.7 billion. The Pentagon signed it on September 25. It builds on a February 2026 framework agreement for annual production of at least 1,900 AMRAAM missiles.
2026-09-22: Defense stocks fell after a Reuters report that Iran offered to reopen the Strait of Hormuz if the US eases military pressure. RTX fell about 3% in morning trading. It had fallen about 10% in the month before.
2026-09-15: RTX named Jill Albertelli president of Pratt & Whitney from January 1, 2027. She replaces Shane Eddy, who retires. She led Pratt & Whitney Military Engines and the F135 engine program.
2026-07-23: RTX reported Q2 2026 results. Sales were $24.7 billion, up 14%, and up 16% organically. Adjusted EPS was $1.89, up 21%. Free cash flow was $2.9 billion. Backlog reached $289 billion, up 22% from a year earlier. RTX raised its 2026 outlook to adjusted sales of $95.0 to $96.0 billion, adjusted EPS of $7.10 to $7.25 and free cash flow of $8.50 to $8.75 billion. It also agreed to sell Raytheon's Blue Canyon Technologies business for $620 million.
2026-04-21: RTX reported Q1 2026 results. Sales were $22.1 billion, up 9%. Adjusted EPS was $1.78, up 21%. Backlog was $271 billion. RTX raised its 2026 outlook for adjusted sales and adjusted EPS.