RTX (RTX) Could Be 5% Undervalued As Earnings And SPY 6 Progress Land

RTX (RTX) is drawing fresh attention after reporting second quarter 2026 earnings, with revenue of US$24.7b and net income of US$2.1b, alongside progress on its SPY-6(V)4 radar program for the U.S. Navy.

See our latest analysis for RTX.

RTX shares are trading at US$216.65, with a 1 month share price return of 8.73% and a 3 month share price return of 22.58%, while the 1 year total shareholder return of 40.79% and 5 year total shareholder return of 175.93% reflect recent momentum around the latest earnings and defense contract news.

If RTX's mix of defense programs and commercial aerospace has your attention, it can be useful to look across the sector and compare other power and radar suppliers using the 36 power grid technology and infrastructure stocks

RTX's strong recent gains sit alongside rising revenue, higher net income and fresh SPY-6 progress. Is this mainly a reset in sentiment around defense and aerospace, or a fair reflection of what the business is delivering today?

Most Popular Narrative: 4.5% Undervalued

RTX closed at $216.65 compared with a narrative fair value of $226.82, which frames the recent rally as still slightly short of that estimate.

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. Read the complete narrative.

Want to understand why this backlog matters for RTX today and not just years out? The fair value hinges on how analysts connect revenue growth, margin expansion, and future earnings power into a single pricing blueprint that is not obvious from the headline numbers.

Result: Fair Value of $226.82 (UNDERVALUED)

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

However, RTX investors still need to watch for jet engine reliability and aftermarket cost overruns at Pratt & Whitney, as well as possible shifts in government defense budgets.

Find out about the key risks to this RTX narrative.

Another View on RTX: Valuation Through the P/E Lens

The earlier narrative framed RTX as about 4.5% undervalued against a fair value of $226.82. On P/E, the picture looks tighter. RTX trades at 37.7x earnings, in line with the wider US Aerospace & Defense industry on 37.7x and slightly above its own fair ratio of 36x.

This small premium to the fair ratio suggests less room for error if growth or margins slip, even if the discount to fair value screens as attractive. Which lens do you trust more when the market is pricing RTX so close to its peers and its own fair ratio?

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

Next Steps

Does the mix of optimism and concern in RTX's story match your own read of the numbers and risks, or does it feel too one sided? Take a closer look at the full picture with the 3 key rewards and 3 important warning signs

Looking for more investment ideas beyond RTX?

Before moving on, take a moment to line up your next opportunities using the Simply Wall St Screener so you are not relying on RTX alone.

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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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