RTX (NYSE:RTX) Valuation Check After Recent Pullback And Backlog Driven Undervaluation Narrative

RTX stock snapshot and recent performance

RTX (RTX) has attracted investor attention after recent price moves, with the stock up around 3% over the past day but down about 1% over the past week and 10% over the past month.

See our latest analysis for RTX.

RTX's recent share price pullback, with a 30-day share price return of down 10.42% and a year to date share price return of down 6.03%, contrasts with its 1-year total shareholder return of 30.41%. This suggests longer term holders have seen substantially stronger outcomes than short term traders.

If RTX's recent moves have you thinking about other opportunities in defense and aerospace linked infrastructure, this could be a good moment to check out 35 power grid technology and infrastructure stocks

With RTX trading around $175.95 and analysts' average price target sitting higher at about $215.27, plus an internal value score of 4 and a small intrinsic premium, investors may want to consider whether there is still an opportunity at the current price or whether the market is already pricing in future growth.

Most Popular Narrative: 18.3% Undervalued

RTX's most followed narrative pegs fair value at about $215.27 per share, above the last close at $175.95. This puts the current pullback in a different light.

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 how it connects to future earnings, margins and the implied valuation multiple for RTX?

Result: Fair Value of $215.27 (UNDERVALUED)

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

However, tariff shocks or renewed jet engine reliability issues could quickly pressure margins and cash flows, which would challenge the upbeat assumptions behind the current fair value narrative.

Find out about the key risks to this RTX narrative.

Another Way To Look At RTX's Value

Analysts see RTX trading on a P/E of 32.7x, compared with 34.4x for the US Aerospace & Defense industry and a peer average of 52.4x. The fair ratio estimate sits at 36.9x. That gap suggests room for the market to rethink RTX. In which direction do you think it closes?

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

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out RTX for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 51 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

All this points to a mixed picture, with both risks and rewards on the table. Consider reviewing the data promptly and forming your own stance using 5 key rewards and 3 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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