RTX (RTX) Stock Price Shrugs Off Q3 Earnings As Cash Questions Persist

RTX shares barely budged on Tuesday, ticking up 0.6% to about US$193 after the Q3 2026 report. For a stock that has drifted slightly over the past three months, that is a muted reaction to a quarter that recorded US$24.97b in revenue and a sharp increase in basic earnings per share to US$1.91.

Short term traders see a quiet chart. Longer term investors are looking at a different picture altogether, one in which expanding net profit margins and a richer earnings base factor directly into multi year cash flow models and valuation discussions.

Impressed by RTX turning US$24.97b of quarterly sales into a stronger earnings base and wondering which other companies are pairing solid revenue with expanding profit margins? Take a look at our curated list of stocks in the list of solid balance sheet and fundamentals stocks (25 results)

Q3 2026 RTX Earnings Summary

• Revenue (Q3 2026 vs Q3 2025): US$24,965m vs. US$22,478m (up about 11%)
• Net Income, Excl. Extra Items (Q3 2026 vs Q3 2025): US$2,583m vs. US$1,918m (up about 35%)
• Basic EPS (Q3 2026 vs Q3 2025): US$1.91 vs. US$1.43 (up about 34%)
• Trailing 12 Month Net Income, Excl. Extra Items (Q3 2026 vs Q3 2025): US$8,403m vs. US$6,592m (up about 28%)

Earnings are the headline, but investors who care about what RTX is worth usually focus on the cash flowing through the business over time instead of a single quarter's profit print. Looking at RTX's cash flows alone, the stock could be a modest 13% undervalued.

RTX backlog story meets capacity reality

RTX bulls argue that today’s record order book can only matter if factories and suppliers keep up with the promised ramp.

"A key factor is that RTX continues to execute on supply chain expansion and factory investments so that higher GTF MRO volumes and munitions contracts can translate into timely deliveries and cash generation."

Q3 points to progress rather than hand waving. Raytheon sales rose 14% with critical munitions output up 90%, and bookings of US$52.3b pushed total backlog to US$340b. Pratt & Whitney and Collins both grew high teens in aftermarket, with GTF MRO output up 35%. Guidance for 2026 sales, EPS and free cash flow all moved higher, which supports the idea that added capacity is starting to convert into revenue and earnings instead of just higher capex.

RTX investment surge still carries margin risk

Bears question whether RTX can spend heavily on plants and engineering without crimping the very cash flow story supporters focus on.

"RTX plans to commit about US$10b to US$10.5b in 2026 to engineering and development and capital expenditure. If these large outlays do not translate into timely capacity gains or revenue, the result could be lower free cash flow and less improvement in net margins than investors currently expect."

The latest quarter does not remove that concern. Free cash flow of US$2.1b and the higher 2026 cash outlook benefited from IEEPA refunds and fading powder metal payments, which are temporary. Management also flagged working capital pressure as inventories build to support the larger backlog. EBIT improvements in all three segments help, yet the capex wave is still ahead, so the test on sustainable cash conversion is not finished.

Not everyone reads the same price the same way. → See the higher figure this Narrative lands on, and how it gets there.

Hunt For Mispriced Earnings Power

RTX just showed how a busy order book and heavy investment can leave the share price almost unchanged in the short term. The real opportunity is finding companies that could be undervalued before the market closes that gap.

• Company 1 - 45% below our estimate - uses a high-touch banker model while integrating a major merger to scale specialty lending and fee platforms.
• Company 2 - 46% below our estimate - sells large LED systems as digital signage, transport projects and youth sports facilities adopt software-tied displays.
• Company 3 - 25% below our estimate - develops injectable obesity and diabetes treatments while building new capacity for its highest-demand drugs.

Those are three of them. See all 34 potentially undervalued companies →

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com