AI Consensus Investment Thesis
RTX (RTX) Stock Forecast and AI Rating
Forecast targets and rating
Final recommendation
NEUTRAL
Calculated from the frozen synthesized path using the same return, horizon, volatility and dividend rules as individual opinions.
1-Year
NEUTRAL$203
+4.5%+6.1% incl. dividends5-Year
NEUTRAL$262
+35.3%+46.5% incl. dividendsLatest flagship insight
Unpacking Aerospace Backlog Valuation Compression Amid Soaring Sovereign Defense Windfalls
Synthesizing input reports reveals high consensus that record backlogs and commercial aftermarket annuities drive powerful cash-flow expansion. However, sharp divergence persists regarding whether five percent bond yields will force multiple derating, counteracting operational gains and capping five-year equity price appreciation.
This is the latest published deep-analysis batch. Audit published forecasts in full transparency
Universal Investor (Polymath), Elon Musk (Visionary), Superintelligence (Anthropologist), Sherlock Holmes (Whistleblower), Warren Buffett (Value Purist), Ray Dalio (Strategist), Michael Burry (Vulture), Machiavelli (Insider), J.P. Morgan (Titan). Some archetypes run in multiple modes, resulting in 14 advisors total.
Gemini
Claude
ChatGPTExecutive Summary
Dotted terms open concise definitions. Browse technical terms
If you invested $10,000 in RTX at the forecast anchor (2026-09-18): $14,647 in five years versus $13,892 for S&P 500 benchmark.
* Return is calculated incl. 1.6% net dividend yield for RTX.
20-quarter synthesized forecastPrice targets, quarterly returns and the reasoning behind each stepView tableClose table
Frozen forecast from 18 Sept 2026. Prices in USD; returns exclude dividends. Each quarter is compounded from the previous quarter.
Swipe the table horizontally to read every column.
| Quarter | Target (USD) | Quarter return | Total return | Forecast rationale |
|---|---|---|---|---|
| Q4 2026 | 195.32 | +0.68% | +0.68% | Steady commercial aftermarket demand and initial Tomahawk award billing support earnings, but five percent benchmark Treasury yields and year-end multiple compression restrain broad industrial equity advances. |
| Q1 2027 | 196.12 | +0.41% | +1.09% | Conservative full-year guidance reconciles recurring cash flow against advance billing timing, while suspended share buybacks and restrictive monetary policy temper institutional valuation multiples despite solid top-line revenue. |
| Q2 2027 | 200.22 | +2.09% | +3.21% | Expanding commercial airline flight hours drive lucrative spares volume through Collins Aerospace, overcoming fixed-price defense program cost inflation and prompting positive operational earnings drop-through. |
| Q3 2027 | 202.64 | +1.21% | +4.45% | Allied munitions procurement tranches accelerate defense backlog conversion, but specialized aerospace casting delays and tariff-induced raw material expenses keep quarterly margin expansion in check. |
| Q4 2027 | 208.52 | +2.90% | +7.48% | Declining powder metal customer compensation payments liberate operational cash flow, allowing strong year-end defense billings and improved shop-visit throughput to drive moderate share price appreciation. |
| Q1 2028 | 210.65 | +1.02% | +8.58% | Reported annual cash generation confirms operational stabilization above guidance floors, yet ongoing congressional defense appropriation debates and restrictive policy rates restrict broader equity multiple re-rating. |
| Q2 2028 | 214.92 | +2.03% | +10.78% | Collins Aerospace achieves higher operating margins on robust commercial retrofit activity, while Pratt's new engine deliveries gradually scale, offsetting localized labor inflation across manufacturing centers. |
| Q3 2028 | 217.78 | +1.33% | +12.26% | International air defense shipments expand foreign military sales mix, maintaining stable operating income that counterbalances election-cycle defense budget posturing and industrial valuation consolidation. |
| Q4 2028 | 221.81 | +1.85% | +14.33% | Post-election legislative clarity establishes firm multi-year procurement funding, while factory automation investments debottleneck missile integration lines, powering solid year-end cash collections. |
| Q1 2029 | 224.91 | +1.40% | +15.93% | Full-year results reflect the near-total expiration of fleet inspection compensation penalties, enabling management to expand dividend distributions and demonstrate structural balance sheet de-leveraging. |
| Q2 2029 | 229.25 | +1.93% | +18.17% | Commercial narrowbody flight-hour maintenance delivers dependable cash generation, though late-cycle macroeconomic moderation and high jet fuel prices temporarily slow discretionary airline cabin interior upgrades. |
| Q3 2029 | 233.08 | +1.67% | +20.15% | Transition of next-generation radar systems and hypersonic defense programs into initial low-rate production provides high-margin defense revenue, preserving predictable operating margins and steady price performance. |
| Q4 2029 | 238.28 | +2.23% | +22.83% | Multi-year missile production facilities achieve targeted efficiency run-rates, lowering unit manufacturing overhead and driving robust fourth-quarter free cash flow conversion across core operating segments. |
| Q1 2030 | 240.04 | +0.74% | +23.73% | Potential regulatory easing or performance clearance allows selective resumption of share repurchases, reinforcing per-share earnings growth against a backdrop of mature through-cycle industrial valuation multiples. |
| Q2 2030 | 244.53 | +1.87% | +26.05% | The installed geared turbofan commercial fleet enters its primary heavy maintenance cycle, driving record aftermarket service volume and lifting Pratt & Whitney segment margins toward long-term targets. |
| Q3 2030 | 247.52 | +1.22% | +27.59% | Allied sovereign defense budgets plateau into steady sustainment procurement, keeping defense order books fully utilized while overall top-line expansion stabilizes near historical industrial norms. |
| Q4 2030 | 252.27 | +1.92% | +30.04% | Substantial annual free cash generation exceeding eleven billion dollars supports further balance sheet optimization, providing defensive valuation support as long-duration equity risk premia normalize. |
| Q1 2031 | 255.27 | +1.19% | +31.58% | First-quarter military propulsion sustainment revenues from the global fighter fleet provide dependable baseline cash flow, insulating consolidated operational results from broader macroeconomic softening. |
| Q2 2031 | 259.48 | +1.65% | +33.75% | Collins Aerospace deploys advanced digital avionics and power architectures across commercial fleet retrofits, generating high cash drop-through that sustains modest, orderly capital appreciation. |
| Q3 2031 | 262.47 | +1.15% | +35.29% | The five-year forecast horizon closes with operating earnings fully normalized, as steady aftermarket cash flow and contracted defense manufacturing balance terminal multiple compression near historical averages. |
The central investment thesis establishes an operational recovery anchored by a record $289 billion backlogbacklogThe total value of signed contracts yet to be fulfilled, representing future revenue visibility.View full glossary entry and a captive commercial aftermarketcommercial aftermarketParts, maintenance, and service revenue earned after commercial equipment has been sold.View full glossary entry annuity, counterbalanced by valuation multiplevaluation multipleA ratio comparing market or enterprise value with a financial measure such as earnings, revenue, book value, or cash flow.View full glossary entry compression. While high-margin commercial flight hours and multi-year munitions block-buys expand operating marginsoperating marginsOperating profit as a percentage of revenue after operating expenses, before interest and taxes.View full glossary entry toward 12.5% and push normalized free cash flowfree cash flowFree cash flow (FCF) is cash generated after operating expenses and capital expenditures that remains available for debt reduction, reinvestment, or shareholder returns.View full glossary entry past $11 billion, current pricing near 27x forward earningsforward earningsEstimated future profitability used to calculate valuation multiples for investment analysis.View full glossary entry leaves virtually zero equity risk premium against five percent sovereign yields. As fixed-price defense cost drag dissipates and geared turbofan warranty outlays subside, operational earnings expansion will primarily serve to offset multiple de-rating back toward through-cycle industrial medians of 21x to 22x earnings.
Key insights
- Sustained commercial flight hours and deferred narrowbody retirements create an inflation-indexed aftermarket cash engine, driving Collins segment operating marginsoperating marginsOperating profit as a percentage of revenue after operating expenses, before interest and taxes.View full glossary entry toward twenty percent.
- Sovereign capital-allocation restrictions and executive buyback bans eliminate artificial per-share earnings leverage, forcing investors to rely strictly on organic operational throughput.
- Thermodynamic factory throughput limits and sub-tier casting shortages constrain backlogbacklogThe total value of signed contracts yet to be fulfilled, representing future revenue visibility.View full glossary entry-to-cash conversion velocity, making top-line delivery pacing the critical thesis bottleneck.
The company owns two powerful business engines: commercial airplane maintenance and sovereign military defense systems. A massive $289 billion order bookorder bookThe set of confirmed customer orders that have not yet been delivered or recognized as revenue.View full glossary entry and growing airplane flight hours will steadily lift earnings and free cash flowfree cash flowFree cash flow (FCF) is cash generated after operating expenses and capital expenditures that remains available for debt reduction, reinvestment, or shareholder returns.View full glossary entry as past engine repair costs fade away. However, because the stock already trades at a premium valuation while interest rates remain near five percent, shrinking valuation multiples will absorb much of this profit growth, producing solid but measured total returns rather than an explosive rally.
Key insights
- Airlines flying older aircraft longer generates highly profitable, recurring maintenance and spare-parts income that cushions broader economic slowing.
- Government scrutiny on defense contractor profits and paused share repurchases mean earnings growth must come from physical manufacturing.
- Specialized factory bottlenecks and aerospace raw material shortages slow down how quickly record orders turn into audited cash.
Deep Dive
The prevailing crowd narrative views the business as an impregnable geopolitical hedge and commercial aerospace compoundercompounderA business or asset that can reinvest earnings or cash flows at attractive returns over an extended period.View full glossary entry. Market participants anchor heavily on the record $289 billion order bookorder bookThe set of confirmed customer orders that have not yet been delivered or recognized as revenue.View full glossary entry and rising global defense budgets, assuming the resolution of engine inspection issues guarantees flawless double-digit cash flow expansion. Sell-side research largely overlooks restrictive interest rates and defense buyback restrictions, treating peak valuation multiples as permanently sustainable.
Paywalled preview begins: Deep Dive: detailed analysis
From this section to the end-of-preview notice below, research is provided as simplified HTML text and tables. Full access provides the complete interactive interface, charts and additional datasets.
Deep Dive
Alpha Gap & Repricing Catalysts
Where does the current market narrative diverge from our AI Opinions—and what could close the gap?
Market Narrative
What does the market currently expect? The prevailing crowd narrative views the business as an impregnable geopolitical hedge and commercial aerospace compoundercompounderA business or asset that can reinvest earnings or cash flows at attractive returns over an extended period.View full glossary entry. Market participants anchor heavily on the record $289 billion order bookorder bookThe set of confirmed customer orders that have not yet been delivered or recognized as revenue.View full glossary entry and rising global defense budgets, assuming the resolution of engine inspection issues guarantees flawless double-digit cash flow expansion. Sell-side research largely overlooks restrictive interest rates and defense buyback restrictions, treating peak valuation multiples as permanently sustainable.
Alpha Gap
What is the biggest difference between market expectations and our AI forecasts? The crowd overestimates valuation durability under five percent sovereign discount rates while misinterpreting trailing cash metrics. Trailing free cash flowfree cash flowFree cash flow (FCF) is cash generated after operating expenses and capital expenditures that remains available for debt reduction, reinvestment, or shareholder returns.View full glossary entry of $12.0 billion overstates recurring yields due to depressed prior-year comparators, whereas management's normalized outlook implies an unexceptional 3.2% free cash flow yieldfree cash flow yieldFree cash flow divided by market value, showing cash generation relative to the asset price.View full glossary entry. Furthermore, investors fixate on headline defense bookings while missing the structural pricing powerpricing powerThe ability of a company to raise prices without losing significant customer demand.View full glossary entry inside proprietary commercial flight-hour agreements, which provide the authentic compounding foundation.
Repricing Catalyst
What could make the market recognize and close that gap? The convergence catalyst will trigger as audited 2026-2027 financial disclosures demonstrate normalized free cash flowfree cash flowFree cash flow (FCF) is cash generated after operating expenses and capital expenditures that remains available for debt reduction, reinvestment, or shareholder returns.View full glossary entry tracking the $8.50 to $8.75 billion range rather than trailing extrapolations. When rising volume converts into cash alongside persistent share-buyback suspensions and five percent bond yields, institutional investors will reprice the stock toward historical industrial valuation multiples despite healthy underlying revenue growth.
Sentiment and Timing
What do sentiment, volatility, and the market-recognition cycle suggest about the thesis timing?
- Greed / Fear
- Greed
- Volatility
- Moderate
- Cycle position
- Momentum
Sentiment assessments agree on strong operational momentum but sharply diverge over whether current market pricing reflects a speculative overshoot. Bullish perspectives view valuation as anchored by scarce defense capacity, while cautious analyses highlight multiple de-rating risk against elevated sovereign discount rates.
Macro Regime Fit
Does the current market environment support the thesis? The macroeconomic backdrop represents a mixed regime. Geopolitical conflict and non-discretionary sovereign defense rearmament provide an enduring demand tailwind that insulates order backlogsorder backlogOrder backlog is the value or volume of confirmed customer orders that have not yet been delivered, fulfilled, or recognized as revenue.View full glossary entry from consumer economic weakness. However, a restrictive monetary policy regime featuring policy rates near 4.00% and 10-year Treasury yields touching 5.0% acts as a persistent valuation headwind, mechanically compressing capital-intensive industrial multiples.
Advisor Disagreement
What do our AI Advisors disagree about most? The decisive analytical disagreement centers on the terminal valuationterminal valuationTerminal valuation is the estimated value of an asset or business beyond the explicit forecast period in a discounted cash flow model.View full glossary entry multiple and the durability of capital returnscapital returnsDistributions of capital to investors, commonly through dividends or share repurchases.View full glossary entry. Optimistic perspectives assume that unassailable defense indispensability and an expanding commercial aftermarketcommercial aftermarketParts, maintenance, and service revenue earned after commercial equipment has been sold.View full glossary entry annuity will preserve a premium price-to-earnings multipleearnings multipleThe ratio of share price to earnings per share used to determine stock valuation.View full glossary entry above 24x. Conversely, conservative analyses argue that five percent Treasury yields, tangible equity deficits, and executive restrictions on buybacks make multiple compressionmultiple compressionA decline in valuation ratios such as price-to-earnings or enterprise-value-to-sales.View full glossary entry toward 20x inevitable. Resolving this tension requires observing whether full-year 2026-2027 free cash flow conversionfree cash flow conversionThe proportion of earnings, EBITDA, or another operating measure converted into free cash flow over a specified period.View full glossary entry exceeds guided baselines without working-capital bottlenecks, and whether the Pentagon permits buybacks to resume.
Base-Case Forces
Event Risk ScoreLow25/100Near-certain positive forces
Top Drivers / Tailwinds
Near-certain forces that support the investment thesis. These forces are treated as part of the base case (more than 60% probability of occurrence). Impact columns are specific to this asset class.
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| Driver / Tailwind | Category | Est. stock-price impact | Est. earnings impact | Why it matters |
|---|---|---|---|---|
| Sovereign Munitions Replenishment Supercycle | Political And Geopolitical | +24% | +30% | Multi-theater geopolitical conflicts have depleted Western missile arsenals, prompting multi-year sovereign procurement authorizations for Patriot, AMRAAM, and Tomahawk effectors. This non-cyclical replenishment demand expands Raytheon backlogbacklogThe total value of signed contracts yet to be fulfilled, representing future revenue visibility.View full glossary entry and guarantees sustained production line utilization, driving operating marginsoperating marginsOperating profit as a percentage of revenue after operating expenses, before interest and taxes.View full glossary entry toward 13% across defense manufacturing programs through 2031. |
| Commercial Aerospace Aftermarket Annuity | Competitive Positioning | +20% | +25% | OEM delivery delays force airlines to extend legacy narrowbody airframe lifecycles, generating sustained flight-hour billing and high-margin shop visits across Collins Aerospace and Pratt & Whitney. Proprietary component intellectual propertyintellectual propertyLegally protected intangible creations such as patents, copyrights, trademarks, designs, trade secrets, and proprietary know-how.View full glossary entry provides exceptional pricing powerpricing powerThe ability of a company to raise prices without losing significant customer demand.View full glossary entry, structurally lifting Collins segment operating marginsoperating marginsOperating profit as a percentage of revenue after operating expenses, before interest and taxes.View full glossary entry toward 20% and generating predictable, inflation-indexed cash flows. |
| Powder Metal Fleet Normalization | Operational Efficiency | +15% | +18% | The geared turbofan powder metal inspection campaign is transitioning from an acute liquidity drainliquidity drainA reduction in money or financing available to markets, which can tighten credit and pressure valuations.View full glossary entry into a standard maintenance workflow. Aircraft-on-ground counts are falling significantly while airline compensation payments run off, liberating billions in trapped operating cash flowoperating cash flowCash generated or consumed by a company's core business operations.View full glossary entry and lifting consolidated annual cash conversion back above 85% of net income. |
| BacklogbacklogThe total value of signed contracts yet to be fulfilled, representing future revenue visibility.View full glossary entry Delivery Operational Leverage | Operational Efficiency | +12% | +16% | Converting a record $289 billion backlogbacklogThe total value of signed contracts yet to be fulfilled, representing future revenue visibility.View full glossary entry into delivered systems amortizes fixed plant overhead across expanding commercial engine and advanced sensor volumes. Factory debottlenecking and automation investments reduce unit assembly costs, enabling consolidated operating marginsoperating marginsOperating profit as a percentage of revenue after operating expenses, before interest and taxes.View full glossary entry to expand toward 12.5% as legacy fixed-price development drag burns off. |
Near-certain negative forces
Top Frictions / Headwinds
Near-certain forces that could slow, cap, or damage the thesis. These forces are treated as part of the base case (more than 60% probability of occurrence). Impact columns are specific to this asset class.
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| Friction / Headwind | Category | Est. stock-price impact | Est. earnings impact | Why it matters |
|---|---|---|---|---|
| Valuation Compression Under Restrictive Rates | Macroeconomic And Macrofinancial | -16% | -3.0% | Trading at elevated trailing price-to-earnings multiples while 10-year Treasury yields linger near 5.0% generates severe discount ratediscount rateThe rate used to convert future cash flows or values into present value.View full glossary entry friction. As equity risk premia normalize against risk-free sovereign yields, capital-intensive industrial multiples face mechanical downward compression toward historical medians of 20x to 22x, offsetting operational earnings gains. |
| Aerospace Sub-Tier Supply Bottlenecks | Operational Efficiency | -11% | -13% | Industry-wide structural deficits in specialized aerospace forgings, titanium castings, and cleared precision machinists throttle manufacturing throughput. Sub-tier supplier delivery delays prolong production cycles, forcing the company to maintain expensive work-in-process buffer inventories that tie up working capitalworking capitalShort-term operating capital measured as current assets minus current liabilities.View full glossary entry and dilute intermediate return on invested capitalreturn on invested capitalReturn on invested capital (ROIC) measures how efficiently a business generates after-tax operating profit from the capital invested in its operations.View full glossary entry. |
| Fixed-Price Defense Development Overhang | Regulatory | -9.0% | -11% | Legacy fixed-price development contracts across defense sensor and missile platforms remain exposed to cumulative labor and material inflation. Because government procurement rules strictly allocate cost overruns to contractors, unanticipated technical hurdles periodically trigger reach-forward accounting write-downs, diluting defense segment profitability despite expanding top-line volumes. |
| Regulatory Scrutiny on Capital Allocationcapital allocationThe decision process for directing capital among operations, investment, acquisitions, debt repayment, dividends, and share repurchases.View full glossary entry | Capital Allocation | -8.0% | -6.0% | Executive orders and Department of Defense scrutiny over contractor capital distribution have curtailed share repurchases, forcing capital redirection into factory expansion and supplier support. Halting programmatic buybacks eliminates an artificial per-share earnings compounding engine, removing downside share price support during broad market consolidations. |
What Could Break or Accelerate the Thesis
Plausible downside scenarios
Tail Risks
Tail yet plausible downside scenarios selected for their highest potential impact.
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| Tail scenario | Chance of Occurring | Stock Price Impact | Why plausible / what changes |
|---|---|---|---|
| Secondary Commercial Fleet Metallurgical Crisis | 21% | -28% | Discovery of unexpected micro-cracking or structural fatigue across newer cohorts of high-pressure turbine disks by 2027 would trigger emergency airworthiness directives grounding hundreds of commercial airliners. The resulting catastrophe would ignite billions in fresh airline customer compensation liabilities, consume scarce depot repair capacity, and wipe out anticipated free cash flowfree cash flowFree cash flow (FCF) is cash generated after operating expenses and capital expenditures that remains available for debt reduction, reinvestment, or shareholder returns.View full glossary entry for multiple quarters. |
| Statutory Defense Procurement Spending Sequestration | 25% | -22% | Severe sovereign debtsovereign debtDebt issued or guaranteed by a national government.View full glossary entry consolidation pressures culminating in statutory budget caps or defense procurement freezes by late 2027 would stretch out munition delivery schedules. Bipartisan austerity measures targeting discretionary defense outlays would cancel follow-on missile options, leaving expanded manufacturing capacity underutilized, causing fixed-overhead unabsorption, and reducing projected defense operating income. |
Plausible upside scenarios
Tail Opportunities
Tail yet plausible upside scenarios selected for their highest potential impact.
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| Tail scenario | Chance of Occurring | Stock Price Impact | Why plausible / what changes |
|---|---|---|---|
| Golden Dome Sovereign Mandate Award | 32% | +24% | A funded multi-tier homeland defense architecture award naming the company prime contractor for next-generation interceptors, sensors, and battle management by 2028 would unlock over $25 billion in sole-source bookings. This discrete government mandate would expand the defense backlogbacklogThe total value of signed contracts yet to be fulfilled, representing future revenue visibility.View full glossary entry significantly, elevate international export pricing powerpricing powerThe ability of a company to raise prices without losing significant customer demand.View full glossary entry, and drive an institutional valuation re-rating beyond base-case projections. |
| Next-Gen Commercial Narrowbody Propulsion Win | 24% | +22% | Securing exclusive or dominant propulsion supplier status on an accelerated clean-sheet narrowbody commercial jet platform by 2029 would cement thirty years of captive engine manufacturing and aftermarket cash flow. Completely shutting out rival engine consortia would dramatically expand the company's long-term terminal valuationterminal valuationTerminal valuation is the estimated value of an asset or business beyond the explicit forecast period in a discounted cash flow model.View full glossary entry, prompting analysts to aggressively upgrade multi-decade owner-earnings assumptions. |
Company Financial Analysis
RTX Earnings and Financials Analysis by AI
Financial figures available as of Sep 20, 2026. Only filings and source records available by this analysis date are included.
Earnings and financials
AI Review
The financial trajectory reflects a powerful operational recovery, evidenced by revenue reaching $93.5 billion and net income climbing to $7.74 billion over the trailing twelve months through mid-2026. This performance marks a structural rebound from 2023, powered by accelerating commercial aftermarket flight hours at Collins and heavy munitions deliveries at Raytheon. However, reported trailing free cash flow of $12.02 billion overstates the normalized run-rate because it reflects depressed prior-year comparators and favorable customer advance payments. Management's official full-year 2026 free cash flow guidance of $8.50 to $8.75 billion provides the realistic cash baseline for long-term investors.
Revenue, earnings, and cash flow
The table compares up to five fiscal years of revenue, net income, and free cash flow available to this analysis.
| Fiscal year | Revenue | Net income | Free cash flow |
|---|---|---|---|
| 2025 | USD 88.6B | USD 6.7B | USD 7.9B |
| 2024 | USD 80.7B | USD 4.8B | USD 4.5B |
| 2023 | USD 68.9B | USD 3.4B | USD 5.5B |
| 2022 | USD 67.1B | USD 5.2B | USD 4.4B |
| 2021 | USD 64.4B | USD 3.9B | USD 4.7B |
Valuation context: historical P/E
The table compares up to five fiscal years of point-in-time valuation evidence available to this analysis.
| Fiscal year | P/E | Earnings basis | Currency basis | Ticker / reporting |
|---|---|---|---|---|
| 2025 | 37.1x | TTM | Native | USD / USD |
| 2024 | 32.7x | TTM | Native | USD / USD |
| 2023 | 35.9x | TTM | Native | USD / USD |
| 2022 | 28.7x | Annual | Native | USD / USD |
| 2021 | 33.4x | Annual | Native | USD / USD |
P/E uses historical market capitalization and earnings known at each period. Cross-currency observations are normalized to USD using point-in-time FX rates.
Profitability and margins
AI Review
Operating margins have embarked on a structural ascent, recovering from 5.17% in 2023 to 10.50% in 2025 and widening past 11% in mid-2026. This resurgence is propelled by high-margin commercial spare parts and flight-hour agreements at Collins Aerospace, alongside tapering engine inspection penalties. A clear margin divergence persists across divisions. While commercial aerospace commands exceptional pricing power, Raytheon's defense margins face drag from legacy fixed-price development contracts and component inflation. Long-term operating margins will likely consolidate between 12% and 13% as manufacturing volume scales.
The table compares up to five fiscal years of operating income and reported profitability margins.
| Fiscal year | Operating income | Operating margin | Net margin |
|---|---|---|---|
| 2025 | USD 9.3B | 10.5% | 7.6% |
| 2024 | USD 6.5B | 8.1% | 5.9% |
| 2023 | USD 3.6B | 5.2% | 4.9% |
| 2022 | USD 5.5B | 8.2% | 7.7% |
| 2021 | USD 5.1B | 8.0% | 6.0% |
Balance sheet and leverage
AI Review
The balance sheet exhibits steady post-crisis de-leveraging, ending 2025 with $65.2 billion in shareholder equity and a conservative debt-to-equity ratio of 0.61. Operating cash flows easily service obligations, maintaining interest coverage at a healthy 5.76 times operating profit. Nevertheless, investors must monitor off-headline exposures. Gross debt remains substantial near $37 billion, and over $80 billion in goodwill and acquired intangibles leaves tangible net worth deeply negative. Pausing share repurchases in 2026 appropriately preserves liquidity to fund customer warranty commitments and upcoming debt maturities.
The table compares up to five fiscal years of debt, liquidity, net cash or debt, and current-ratio evidence.
| Fiscal year | Total debt | Cash + short-term investments | Net cash / (debt) | Current ratio |
|---|---|---|---|---|
| 2025 | USD 39.5B | USD 7.4B | USD 32.1B net debt | 1.03x |
| 2024 | USD 42.9B | USD 5.6B | USD 37.3B net debt | 0.99x |
| 2023 | USD 45.2B | USD 6.6B | USD 38.7B net debt | 1.04x |
| 2022 | USD 33.5B | USD 6.2B | USD 27.3B net debt | 1.09x |
| 2021 | USD 33.1B | USD 7.8B | USD 25.3B net debt | 1.19x |
Net debt below zero is displayed as net cash. Current ratio is current assets divided by current liabilities.
Capex and investment intensity
AI Review
Management has maintained strict capital allocation discipline, with capital expenditures consuming roughly 3.0% of revenue in 2025 at $2.62 billion, while company-funded research and development settled near $2.81 billion. Rather than overbuilding new facilities, capital is targeted toward debottlenecking precision munitions lines and expanding engine maintenance depots. This restrained spending preserves near-term liquidity and supports strong free cash flow generation. Because the sovereign defense customer frequently co-invests in tooling and facility expansions, the business expands manufacturing capacity without diluting its returns on invested capital.
The table compares up to five fiscal years of capital expenditure and research-and-development investment.
| Fiscal year | Capital expenditure | R&D spend |
|---|---|---|
| 2025 | USD 2.6B | USD 2.8B |
| 2024 | USD 2.6B | USD 2.9B |
| 2023 | USD 2.4B | USD 2.8B |
| 2022 | USD 2.8B | USD 2.7B |
| 2021 | USD 2.3B | USD 2.7B |
Quarterly Forecast Scenarios
RTX Averaged Consensus Scenarios
One row per forecast quarter. Asset scenario targets are shown in USD; benchmark values are shown in USD.
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| Quarter | Bear case (USD) | Base case (USD) | Bull case (USD) | S&P 500 benchmark (USD) |
|---|---|---|---|---|
| $188.18 | $195.80 | $201.76 | $750.26 | |
| $184.42 | $197.56 | $211.85 | $736.44 | |
| $178.88 | $201.42 | $218.20 | $743.40 | |
| $177.10 | $203.83 | $226.93 | $755.15 | |
| $180.64 | $209.65 | $233.74 | $776.22 | |
| $182.44 | $212.43 | $243.09 | $787.13 | |
| $186.09 | $216.88 | $247.95 | $802.83 | |
| $182.37 | $219.29 | $255.39 | $812.05 | |
| $186.02 | $224.06 | $260.50 | $839.18 | |
| $187.88 | $227.68 | $268.31 | $850.50 | |
| $191.64 | $232.12 | $273.68 | $872.39 | |
| $189.72 | $235.73 | $281.89 | $885.51 | |
| $191.62 | $241.06 | $287.53 | $909.56 | |
| $193.53 | $243.38 | $296.15 | $916.13 | |
| $195.47 | $247.79 | $299.11 | $936.51 | |
| $191.56 | $250.63 | $305.10 | $947.34 | |
| $193.47 | $255.55 | $308.15 | $969.59 | |
| $195.41 | $258.78 | $314.31 | $979.99 | |
| $197.36 | $262.91 | $320.60 | $999.60 | |
| $195.39 | $265.59 | $323.80 | $1,012 |
Behind the synthesis
How each opinion shapes the consensus
The independently supported consensus demonstrates that the company possesses an unassailable commercial aerospace installed base and multi-year defense replenishment visibility, supported by a record $289 billion backlog. However, reports heavily diverge on whether operational earnings expansion can outrun valuation multiple compression in a five percent Treasury yield environment. Highly weighted opinions rely on verified primary disclosures, recognizing that trailing free cash flow of $12.0 billion overstates recurring owner yields compared to normalized forward guidance of $8.50 to $8.75 billion, while accounting for executive orders curbing share buybacks. Downweighted perspectives either extrapolate defense backlogs into flawless multiple expansion or assume catastrophic immediate defense spending cuts. The strongest contrarian case highlights the thermodynamic cost asymmetry of expending multi-million-dollar interceptors against low-cost drones, which caps long-term munitions pricing. Relative allocations reflect verifiable cash-conversion mechanics, disciplined multiple derating, and persistent tier-three aerospace supply-chain frictions.
Universal Investor AI
The Polymath
Opus 5Exemplary empirical rigor incorporating primary filings, executive orders on defense buyback restrictions, and realistic forward guidance cash yields. It correctly decouples headline order intake from distributable cash, providing an objective framework for valuation compression against sovereign bond yields.
Universal Investor AI
The Polymath
GPT-6 AstraOutstanding evidence-based reconciliation of cash flow metrics, highlighting the difference between trailing accounting free cash and forward normalized guidance. Its treatment of capacity expansion, factory automation, and multiple contraction provides a highly defensible, realistic asset-level scenario.
Superintelligence AI
The Anthropologist
Gemini 3.8 FlashBalanced perspective reconciling backlog conversion against higher sovereign discount rates. It correctly models operating income expansion from receding inspection liabilities alongside valuation compression, but slightly overestimates the speed of sub-tier casting and forging supply-chain recovery over the intermediate horizon.
Ray Dalio AI
The Strategist
Gemini 3.8 FlashStrong macroeconomic grounding regarding equity risk premia normalization against five percent Treasury yields and sovereign fiscal consolidation pressures. It offers rigorous multiple-derating logic, though it somewhat discounts the secular political insulation of replenishment appropriations in multi-theater geopolitical crises.
Universal Investor AI
The Polymath
Gemini 3.8 FlashProvides thorough synthesis of defense block-buys and installed-fleet aftermarket compounding. Its recognition of multiple compression alongside free cash flow growth is causally sound, though it relies heavily on unbooked munitions agreements converting cleanly into double-digit operating margin expansion.
Elon Musk AI
The Visionary
Gemini 3.8 FlashThe report presents sound causal reasoning on thermodynamic throughput limits, skilled aerospace labor friction, and interest rate gravity. Its technological obsolescence warnings regarding low-cost attritable drones are incisive, though it marginally underweights contractual backlog durability across long-cycle sovereign missile programs.
Warren Buffett AI
The Value Seeker
Gemini 3.8 FlashAccurately identifies the wide commercial aerospace moat and owner-earnings recovery as powder metal inspection contingencies wind down. However, the path assumes an aggressive multiple re-rating that understates macro cost-of-capital headwinds and persistent fixed-price defense development contract leakages.
Warren Buffett AI
The Value Seeker
Gemini 3.8 FlashAstutely diagnoses the absence of a margin of safety at thirty-four times trailing earnings. Its bifurcated margin analysis across commercial versus fixed-price military contracts is compelling, though its quarterly forecast path is excessively conservative regarding organic commercial aftermarket cash drop-through.
Superintelligence AI
The Anthropologist
Gemini 3.8 FlashSharp contrarian analysis identifying the thermodynamic cost asymmetry between expensive interceptors and cheap drone swarms. While multiple compression logic is robust, it overly penalizes baseline revenue visibility by assuming severe immediate defense budget retrenchment during active international conflicts.
J.P. Morgan AI
The Titan
Gemini 3.8 FlashThis analysis captures genuine franchise durability and commercial aftermarket strength across aerospace divisions. However, it applies overly optimistic margin trajectories and downplays monetary friction, structural tariff costs, and the valuation drag of an elevated price-to-earnings multiple against higher risk-free sovereign yields.
Universal Investor AI
The Polymath
Gemini 3.8 FlashDetail-rich on munitions frameworks and backlog scale, but exhibits material upside bias. It assumes near-frictionless production doubling and aggressive multiple expansion, downplaying five percent risk-free discount rates, supply-chain bottlenecks, and regulatory scrutiny on prime contractor capital returns.
Niccolo Machiavelli AI
The Insider
Gemini 3.8 FlashIncisive political economy framing regarding the sovereign Arsenal of Freedom mandate and buyback restrictions. Nonetheless, it models an unrealistically bullish multiple expansion to 23x normalized peak earnings, understating the valuation ceiling imposed by prevailing monetary tightening.
Michael Burry AI
The Vulture
Gemini 3.8 FlashRigorous balance-sheet forensics highlighting negative tangible equity and negative equity risk premia. However, its terminal forecast path is excessively punitive, underestimating the pricing power of proprietary commercial flight-hour agreements and durable foreign military sales volume.
Sherlock Holmes AI
The Whistleblower
Gemini 3.8 FlashSolid analysis of the commercial aftermarket compounding cycle and powder metal transition. However, it relies heavily on external macro commentary and projects a relatively linear valuation path that understates geopolitical contracting friction and statutory budget reconciliation risk.
Research Provenance
References & Context
This RTX consensus analysis combines structured market evidence with independent AI-agent forecasts. External references below are limited to sources recorded by the researcher agents for this forecast batch.
Primary analysis inputs
- iPulse AI Multi-Agent Forecasts — independent analyst personas, model outputs, and consensus synthesis.
- iPulse AI Global Events Context — macroeconomic, geopolitical, regulatory, and industry-event context.
- Structured market history — prices, distributions, volatility, identifiers, and listing metadata.
- Company earnings and financial statements — revenue, profitability, balance-sheet, cash-flow, and investment trends.
- Researcher web evidence — public sources consulted to challenge and contextualize the forecast thesis.
Independent AI Advisor panel
- AI Advisors
- 14
- AI Researchers
- 11
- AI Thinkers
- 3
Sources retained from AI Researcher searches
Asset-specific · Researcher webShowing the top 15 of 48 deduplicated sources retained for this batch.
- 01Federal Reserve Board - Federal Reserve issues FOMC statementfederalreserve.gov
- 02News | RTX Reports Q2 2026 Results | RTXrtx.com
- 035 Elite Dividend Stocks Backed by America's Massive Defense Budget - 24/7 Wall St.247wallst.com
- 04Lockheed Martin vs. RTX: Defense Spending Is Surging — Here's Who Wins - 24/7 Wall St.247wallst.com
- 05Five Takeaways from Pratt's Farnborough Comeback Bidairwaysmag.com
- 06FIA 2026: Pratt & Whitney hails 'dramatic' improvement in A320 AOGs - Aviation Business Newsaviationbusinessnews.com
- 07Advanced Repair Development Highlights Pratt & Whitney MRO Investments | Aviation Weekaviationweek.com
- 08Pratt & Whitney Sees High-Single-Digit MRO Growth This Year | Aviation Weekaviationweek.com
- 09Raytheon Technologies Logobenzinga.com
- 10RTX Stock Forecast: Analyst Price Targets and Earnings Outlookbitget.com
- 11RTX (RTX) Reports $289B Record Backlog As Aerospace And Defense Demand Fuels Double-Digit Growthcongress.net
- 12Pratt & Whitney GTF Recall: Airport Financedwuconsulting.com
- 13Raytheon Stock Forecast: Policy Shock, Dividend and Buyback Risk | EBC Financial Groupebc.com
- 14White House seeks $17.5 billion for Golden Dome, but most funding hinges on reconciliation | Federal News Networkfederalnewsnetwork.com
- 15RTX raises 2026 guidance after double-digit sales growth drives Q2 resultsfinance.yahoo.com
And 33 more sources were used and retained in the batch inventory.
Context retained with this Consensus
The same public-safe market, global-event, and fundamental context supplied to the AI Advisor panel.
Global context snapshot
2025 Full-Year Global Market and World-Events Context
Download Archived SnapshotCoverage 2025-01-01 to 2025-12-31 · Knowledge cutoff 2025-12-31
This full-year context package covers the principal geopolitical, economic, monetary-policy, technology, trade, energy, and institutional developments that shaped global markets during 2025. It gives the forecasting model a chronological account of major world events together with their likely transmission into growth, inflation, interest rates, supply chains, commodities, currencies, public markets, and sector-level investment conditions.
The package also includes monthly and quarterly macroeconomic and cross-asset reference tables spanning US and international growth, central-bank policy, sovereign yields, major equity indices, foreign exchange, energy, industrial and precious metals, and digital assets. Quarterly and full-year high-impact summaries are integrated; monthly quantitative series remain working values pending final audit, and that qualification is part of the preserved context.
| Top 3 Market Shifts From File | Date | Status |
|---|---|---|
| DeepSeek shock and AI economics reset | 2025-01-27 | OPEN ENDED TREND |
| US tariff regime escalation and trade-system rupture | 2025-02-01 | ACTIVE POLICY REGIME |
| Federal Reserve easing cycle after a prolonged hold | 2025-09-17 | ACTIVE POLICY REGIME |
Representative Sources of the Context File
And more sources from the retained context package.
2026 Year-to-Date Global Market and World-Events Context Through September 20
Download Archived SnapshotCoverage 2026-01-01 to 2026-09-20 · Knowledge cutoff 2026-09-20
January 1-September 20, 2026: monetary tightening, energy security, trade restrictions, AI financing and divergent growth; five leading market themes.
Fed raised rates to 3.75%-4.00%; ECB hike is in force and BOJ increase starts September 24. Markets through September 18, bitcoin through September 19.
| Top 3 Market Shifts From File | Date | Status |
|---|---|---|
| Renewed monetary tightening amid persistent inflation | 2026-01-30 | ACTIVE POLICY REGIME |
| Iran/Hormuz conflict and wider energy-security disruption | 2026-02-28 | ONGOING |
| Tariff legal reset and strategic supply restrictions | 2026-02-20 | ACTIVE POLICY REGIME |
Representative Sources of the Context File
And more sources from the retained context package.
Fundamental context
Income statement
9 fieldsdepreciationAndAmortization · ebit · ebitda · grossProfit · +5 more fields
Balance sheet
12 fieldscash · commonStockSharesOutstanding · longTermDebt · netDebt · +8 more fields
Cash flow
5 fieldscapitalExpenditures · dividendsPaid · freeCashFlow · salePurchaseOfStock · +1 more field
annual: 2014-12-31–2025-12-31, 12 periods; quarterly: 2023-09-30–2026-06-30, 12 periods
Currencies cited: USD (quote USD; primary reporting USD; converted/valuation USD).
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