RTX (RTX): Evaluating the Stock’s Valuation After Strong Q3 Earnings and Raised Full-Year Outlook

RTX (RTX) posted third-quarter earnings that topped forecasts, with revenue and profit up from last year. The company raised full-year guidance and pointed to steady growth in defense and aerospace demand.

See our latest analysis for RTX.

RTX’s share price has soared this year, with a year-to-date return of nearly 54% and a one-year total shareholder return of 53%. Momentum really gathered pace after the company hiked its full-year guidance on the back of stronger earnings, a new dividend, and upbeat outlooks for its aerospace and defense segments. Recent news like a steady quarterly dividend and large-scale buyback program have kept sentiment positive, while long-term track records show RTX has delivered a total shareholder return of more than 240% over five years.

Given the strong run for RTX, this could be a great moment to see what’s happening elsewhere in aerospace and defense. Discover See the full list for free.

With shares rallying on upbeat results and new guidance, investors now face a key question: Is RTX undervalued at these levels, or is the market already pricing in its accelerating growth, leaving little room for further upside?

Most Popular Narrative: Fairly Valued

With RTX closing at $178.50 and the most widely followed narrative calculating a fair value of $175.33, the company’s market value is almost perfectly aligned with expectations. The narrative weighs projected growth against recent momentum, setting up the next key insight behind this consensus.

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 (for example, EU, MENA, Asia-Pacific) indicate RTX is well-positioned to benefit from sustained increases in global defense spending and heightened geopolitical tensions, providing strong visibility for future revenue growth.

Read the complete narrative.

Curious about why RTX is trading so close to its “fair value”? Hidden in the projections are optimistic numbers for future margins and earnings, all built on a supply chain transformation. Want to see which assumptions are tipping the scales? Dive in to discover the numbers powering this bold price call.

Result: Fair Value of $175.33 (ABOUT RIGHT)

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

However, ongoing tariff costs and persistent jet engine reliability issues at key divisions could quickly challenge the positive outlook for RTX investors.

Find out about the key risks to this RTX narrative.

Another View: SWS DCF Model Raises Caution

While the market price and analyst consensus suggest RTX is about fairly valued, our SWS DCF model presents a more cautious perspective. According to this approach, RTX shares are trading above the estimated intrinsic value. This could signal potential overvaluation if long-term cash flow expectations are not met. Could the market be getting ahead of itself?

Look into how the SWS DCF model arrives at its fair value.

Build Your Own RTX Narrative

If you think differently or want to dig into the details yourself, you can craft your own perspective in just a few minutes. Do it your way.

A great starting point for your RTX research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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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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