A Look At RTX (RTX) Valuation As Long Term Returns Contrast With Richer P/E Multiple

RTX stock snapshot and recent performance context

RTX (RTX) has been on investors’ radar after a period of mixed share performance, with a roughly 5% gain over the past week, a 6% decline over the past month, and a 3% rise over the past 3 months.

At a last close of US$196.21 and a market value of about US$264.1b, the aerospace and defense group shows year to date and 1 year total returns of about 4.8% and 70.1%. Over 3 years and 5 years, total returns are roughly 110.3% and 178.8%, respectively.

See our latest analysis for RTX.

RTX’s recent 4.8% 7 day share price return comes after a weaker 30 day share price return of 6.5% and sits against a much stronger 1 year total shareholder return of 70.1%. This points to longer term momentum outweighing shorter term softness.

If RTX’s recent moves have you thinking about where else capital could go in defense and critical infrastructure, this is a good moment to scan 27 power grid technology and infrastructure stocks

With RTX trading around US$196, alongside growing revenue and net income and a value score of 1, the key question is whether this is an overlooked opportunity or whether markets are already pricing in the company’s future growth.

Most Popular Narrative: 9.7% Undervalued

RTX’s most followed narrative pegs fair value at about $217 per share, compared with the latest close near $196, and anchors that view on long term defense and commercial aerospace demand.

Robust and growing backlog, highlighted by a 1.86 quarter book to bill ratio, $236 billion backlog (up 15% year over year), and major new international contracts (e.g., EU, MENA, Asia Pacific) indicate RTX is well positioned to benefit from sustained increases in global defense spending and heightened geopolitical tensions, setting up strong visibility for future revenue growth.

Read the complete narrative.

Want to see what is behind that backlog story and the implied upside? The narrative focuses on revenue expansion, margin uplift, and an elevated earnings multiple. The mix of commercial engines, aftermarket work, and large defense programs all feed into a single fair value path. Curious which assumptions really move the needle in that model? The detailed narrative spells out the numbers and how they tie back to today’s price.

Result: Fair Value of $217.21 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, there are still meaningful risks, including jet engine reliability and cost overruns at Pratt & Whitney, as well as potential shifts in U.S. and allied defense budgets.

Find out about the key risks to this RTX narrative.

Another angle on RTX’s valuation

Analysts see RTX as about 9.7% undervalued using their fair value of $217.21. However, the current P/E of 39.2x tells a different story. It sits above the US Aerospace & Defense average of 35.9x and above the fair ratio of 36.9x, which points to a richer pricing that could limit upside. So is the opportunity already baked into the multiple, or do you think earnings can grow into it?

See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

Interested in how that mix of risks and rewards really stacks up for your own portfolio? Take a closer look at the full breakdown in 2 key rewards and 2 important warning signs

Looking for more investment ideas?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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