Is It Too Late to Consider RTX After Its 52.7% Surge in 2025?

• Investors wondering if RTX is still worth buying after its huge run, or if the easy money has already been made, can use this article to unpack what the current price implies about future value.
• RTX has climbed 52.7% year to date and 56.3% over the last year, with a 182.8% gain over five years, even though the last month was a relatively modest 1.4% rise and the past week was slightly negative at -0.1%.
• Recent headlines have focused on RTX as a defensive and aerospace heavyweight, with investors zeroing in on the resilience of its government backed contracts and long term demand for commercial aerospace upgrades. At the same time, the market has been reassessing defense contractors more broadly as geopolitical tensions and increased military spending reshape expectations for future cash flows.
• Despite that strength, RTX only scores 1/6 on our valuation checks, which suggests the stock looks expensive on most traditional yardsticks and cheap on just one. Next, we will break down what different valuation approaches say about RTX today and outline a more powerful, narrative driven way to think about its fair value that we will return to at the end.

RTX scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: RTX Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, estimates what a business is worth today by projecting the cash it can generate in the future and discounting those dollars back to the present. For RTX, the model uses a 2 stage Free Cash Flow to Equity approach in $, starting from last twelve month free cash flow of about $4.47 billion and stepping up to analyst and extrapolated forecasts over the next decade.

Analysts see free cash flow rising to around $8.47 billion by 2026, with Simply Wall St then extrapolating further growth to roughly $12.46 billion by 2035. Those future cash flows are discounted back to today, producing an estimated intrinsic value of about $151.90 per share. With the DCF indicating RTX is roughly 16.7% overvalued at the current market price, the model suggests the stock is trading ahead of its cash flow fundamentals rather than at a bargain.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests RTX may be overvalued by 16.7%. Discover 911 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for RTX.

Approach 2: RTX Price vs Earnings

For a mature, consistently profitable business like RTX, the price to earnings (PE) ratio is a straightforward way to gauge how much investors are willing to pay for each dollar of current profit. In general, stronger, more reliable growth and lower perceived risk justify a higher PE, while slower or more volatile earnings usually command a lower, more cautious multiple.

RTX currently trades on a PE of about 36.0x, slightly below the broader Aerospace and Defense industry average of roughly 37.4x, but a bit richer than its immediate peer group at around 34.8x. Simply Wall St goes a step further with its proprietary Fair Ratio of 35.5x, which estimates the PE RTX should trade on after factoring in its earnings growth outlook, profit margins, risk profile, industry positioning and market cap. This makes it more tailored than a simple comparison to peers or the sector, which can be distorted by companies with very different growth, leverage or business models.

With RTX’s actual PE of 36.0x sitting close to the Fair Ratio of 35.5x, the stock looks slightly expensive on earnings, but broadly in line with what its fundamentals justify.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your RTX Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. These are simple stories you create about a company that connect your view of its future revenue, earnings and margins to a financial forecast and, ultimately, a fair value estimate.

On Simply Wall St’s Community page, Narratives are an easy, accessible tool used by millions of investors to turn their assumptions into a structured outlook. This allows you to quickly see how your story about RTX translates into a fair value that you can compare to today’s share price to help decide whether it looks like a buy, hold or sell.

Because Narratives update dynamically when new information emerges, such as news about missile demand, cybersecurity incidents or revised analyst forecasts, your RTX view is grounded in the latest data rather than a static spreadsheet.

For example, one RTX Narrative might assume stronger revenue growth, higher long term margins and a richer future PE, supporting a fair value up near $194.65. A more cautious Narrative might lean toward lower earnings, tighter margins and a cheaper multiple, closer to $134. The difference between those stories can help you decide which scenario you believe is more realistic.

Do you think there's more to the story for RTX? Head over to our Community to see what others are saying!

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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