Is RTX (RTX) A Bargain As Defense Contracts Lift Revenue Visibility?
RTX (RTX) is back in focus after recent contract wins for Raytheon, including a multi year Tomahawk cruise missile agreement, along with continued Pratt & Whitney investment in military engine manufacturing capacity in Poland.
RTX shares closed at US$200.79, with the stock down about 10% on a 30 day share price return and 5% over the past week, following a 12% 90 day share price gain and a 1 year total shareholder return of 29% that builds on very strong 3 and 5 year total shareholder returns.
Compare RTX's contract driven momentum with hand picked defense and infrastructure plays screened for balance sheets and fundamentals in our list of solid balance sheet and fundamentals (52 results).
RTX now sits at an interesting crossroads, with long term defense contracts and engine investments on one side, and a sharp recent pullback on the other. How does that mix translate into today’s valuation?
Most Popular Narrative: 13.6% Undervalued
RTX's most followed narrative pins fair value at about $232 per share, compared with the latest close at $200.79, which frames the recent pullback as a valuation gap rather than just short term noise.
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.
Want to understand why this backlog supports a higher fair value for RTX? The narrative leans heavily on projected revenue growth, margin expansion, and a future earnings multiple that assumes solid execution without stretching assumptions.
Result: Fair Value of $232.27 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, RTX investors still need to watch for fresh jet engine cost overruns or shifts in defense budgets, as these could quickly weaken this undervaluation story.
Find out about the key risks to this RTX narrative.
Next Steps
If this mix of optimism and concern around RTX feels finely balanced, now is a good time to review the data yourself and form an independent view with the 3 key rewards and 3 important warning signs.
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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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