RTX — RTX Corporation

The market is upbeat after Q2 2026 revenue of $24.7B (+14% YoY), adjusted EPS of $1.89 beating consensus, and management raising FY2026 adjusted EPS guidance to $7.10-$7.25 with record backlog near $289B. The analyst consensus is Buy with an average target of $238.5, though insider selling and a high multiple are the main cautions.

Revenue growth has accelerated over the last four reported quarters: YoY revenue growth went from +5.2% in Q1 2025 and +9.4% in Q2 2025 to +8.7% in Q1 2026 and +14.5% in Q2 2026. Operating margin expanded from roughly 9.9% in Q2 2025 to 11.4% in Q2 2026, and diluted EPS rose 28.7% YoY to $1.57. The 2023 Q3 reporting blip distorts earlier comparisons, but from 2024 onward the trend is clear: recovery from the 2024 trough and now accelerating growth.

As of 2026-08-27, RTX is expensive on trailing metrics: TTM P/E is 36.9 versus the 5-year average of 33.7, P/S is 3.06 versus 2.13, and PEG is 1.48. On the raised FY2026 adjusted EPS midpoint of $7.175, forward P/E is about 29.6, which is reasonable but not cheap. The market is paying up for defense/commercial tailwinds, and the valuation is Rich vs. its own history.

The stock is pricing in a meaningful earnings step-up rather than trading on trailing results. It has moved from $150.61 to $212.08, and the TTM P/E of ~37 is acceptable only if RTX converts backlog into roughly $7.10-$7.25 adjusted EPS and keeps growing. If guidance is hit, the current price is roughly fair; if execution slips, the multiple is vulnerable. This is not a broken-turnaround underpricing story; it's a good company with expectations already high.

As of 2026-08-27, RSI(14) was 48.5, neutral rather than overbought or oversold. Price was 2.85% below its 20-day SMA, 3.22% above its 50-day SMA, and 10.31% above its 200-day SMA, indicating a short-term pullback inside a longer-term uptrend. A constructive entry is a reclaim of the 20-day or a dip toward the 50-day around $205, rather than chasing after a ~41% run off the 52-week low.

• Elevated global security tensions and higher U.S./allied defense budgets continue to drive missile and air-defense order activity.
• An aging commercial fleet is keeping high-margin aftermarket services strong for Pratt & Whitney and Collins Aerospace.
• Aerospace supply-chain constraints and component inflation remain a margin and execution headwind.
• Interest rates and industrial valuation multiple compression matter for a stock trading at a premium to its own history.
• U.S. defense appropriations and budget politics create lumpiness in award timing and program funding.

• Q3 2026 earnings expected late October 2026, with updates on backlog conversion, FCF toward the $8.5-$8.8B full-year target, and Pratt & Whitney engine-fix execution.
• Defense budget/appropriations developments and supplemental packages that could accelerate missile and air-defense funding.
• Conversion of recent awards, including Tomahawk, F135 engine advancements, and Next Generation Jammer work, into revenue and margin.
• Continued progress on the Pratt & Whitney GTF engine remediation program, reducing a known operational drag.

• Rich valuation: if growth decelerates or guidance stalls, the premium multiple could de-rate quickly.
• Execution risk across supply chains, skilled labor constraints, and component inflation.
• Pratt & Whitney engine-fix costs or further charges could disrupt earnings and FCF.
• U.S. government budget/appropriations risk, including timing delays or shifts in defense priorities.

RTX is a well-positioned aerospace and defense compounder with record backlog, accelerating revenue, and improving margins, but the stock already trades near a rich multiple. Long-term investors can own it, yet the margin of safety is thin; I lean cautiously bullish and would prefer adding on pullbacks rather than chasing strength.

Applied a 31.0x forward multiple to the FY2026 adjusted EPS midpoint of $7.175, yielding $222.43. The 31x multiple is a modest discount to RTX's 5-year average P/E of 33.7, reflecting moderate margins/ROIC and an already-rich current valuation while crediting record backlog and accelerating growth.