RTX (RTX) Stock Margins Improve As Profit Growth Outpaces Revenue Narratives

RTX (RTX) has just posted its Q2 2026 numbers, with revenue of US$24.7b and basic EPS of US$1.58, after earning US$22.1b of revenue and EPS of US$1.24 in Q2 2025. The company has seen quarterly revenue move from US$21.6b in Q2 2025 to US$24.7b in Q2 2026, while basic EPS over the same period went from US$1.24 to US$1.58. This may lead investors to focus on how the higher net profit margin fits into the RTX earnings story.

See our full analysis for RTX.

With the headline figures on the table, the next step is to compare these results with the most common RTX narratives in the market and assess which stories still hold up and which begin to show weaknesses.

Curious how numbers become stories that shape markets? Explore Community Narratives

Profit growth runs ahead of revenue

• Over the last 12 months, RTX earned US$7.7b of net income on US$93.5b of revenue, with earnings up 25.9% compared with a 5.5% revenue increase from US$83.6b a year earlier.
• What stands out for bullish investors is that profit growth is running ahead of sales, with net income rising from US$6.1b to US$7.7b while five year annual earnings growth of 14.3% is slower than the latest 25.9%. This heavily supports the view that RTX is currently converting its scale into higher profits.
  • This mix of US$93.5b of trailing revenue and a higher net profit base than the prior year directly backs the idea of a diversified aerospace and defense platform that can grow earnings faster than top line.
  • At the same time, the step up from US$6.1b to US$7.7b of net income is stronger than the longer term 14.3% annual trend, so it sets a higher bar for future years where earnings are forecast to grow about 10% per year.

Margins and complexity risk in focus

• RTX’s net profit margin over the last year sits at 8.3%, compared with 7.4% a year earlier, putting more of that US$93.5b of revenue onto the bottom line.
• Bears often highlight execution and complexity risk in aerospace and defense, yet the move in net profit margin from 7.4% to 8.3% works against the idea that cost or program issues are currently eroding profitability.
  • With trailing net income of US$7.7b on US$93.5b of sales, RTX is earning a larger share of each revenue dollar than it did on the prior year’s US$83.6b and US$6.1b, which challenges concerns that large, complex programs are compressing margins.
  • However, the forecast for earnings growth of about 10% per year is more modest than the latest 25.9%, so skeptics may still question how repeatable this margin lift is in such technically intensive businesses.

For readers weighing how much of this profitability story is at risk from complex programs and cost control, skeptics’ concerns are unpacked in more detail in the 🐻 RTX Bear Case.

RTX valuation sits below DCF and peers

• RTX trades at about US$212.79 per share, with a trailing P/E of 37.1x versus a peer average of 53.7x and industry level of 39x, while the current price is around 7.2% below the DCF fair value of roughly US$229.27.
• Supporters argue that this combination of a P/E below peers and a share price under the DCF fair value leans toward a constructive view on RTX, given it comes alongside five year annual earnings growth of 14.3% and trailing net income of US$7.7b.
  • The gap between the US$212.79 share price and the DCF fair value of about US$229.27 suggests the stock has been trading at a discount to that model, even while posting a higher margin of 8.3% over the past year.
  • At the same time, forecasts for around 10% annual earnings growth and about 5.5% revenue growth, both below the cited broader US market forecasts, explain why the P/E of 37.1x still sits under the 53.7x peer average despite the multi year profit growth record.

If you want to see how other investors connect these valuation figures with RTX’s growth record and balance sheet risks, have a look at the 📊 Read the what the Community is saying about RTX..

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on RTX's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

Given the mix of positives and concerns around RTX, it makes sense to move quickly, review the underlying data, and stress test your own thesis. To frame both sides of the story in one place, start with the 4 key rewards and 2 important warning signs.

See What Else Is Out There

RTX carries an earnings growth profile and valuation that sit below some market forecasts and peers, which may leave investors questioning its overall upside potential.

If you want alternatives with stronger value appeal right now, compare RTX against opportunities in the 49 high quality undervalued stocks to see which stocks line up better with your return expectations.

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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