RTX (RTX) Valuation: Is the Stock’s Recent Pause Hiding Further Upside?

RTX (RTX) grabbed headlines this week after a relatively flat session, with the stock closing at $156.24, down just slightly from the previous day. It is not a splashy move, but it raises the question for investors: Are we simply seeing a pause, or is this a signal that the market is growing more cautious after a year of strong gains? In a year marked by both broader market optimism and persistent macro uncertainty, even minor movements in big names like RTX tend to get noticed.

Looking at the bigger picture, RTX has posted some notable numbers over the past twelve months, climbing 34% and continuing its upward momentum with an 18% gain in the past three months. Recent steady revenue and net income growth point to underlying business strength, even as day-to-day price action remains muted. Whether this slow patch is just a breather or the start of something different is what investors are now left to figure out.

After such a strong run, the big question for investors remains: Does RTX now offer a good entry point, or has the market already priced in all the forward growth?

Most Popular Narrative: 3.9% Undervalued

According to community narrative, RTX is currently viewed as modestly undervalued, with analysts suggesting the stock's fair value lies slightly above its present market price. This assessment takes into account projected earnings, margins, and the company’s global contract pipeline.

“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. These factors provide strong visibility for future revenue growth.”

What is really fueling this valuation call? There is a hidden formula: big growth, resilient cash, and future margins are all stacked up to propel RTX past peers. Curious about the precise analyst forecasts and how steep their assumptions run? Find out what’s behind the valuation gap and whether RTX can actually deliver on these ambitious targets.

Result: Fair Value of $162.50 (UNDERVALUED)

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

However, persistent jet engine reliability issues or sudden shifts in defense budgets could quickly undermine even the most optimistic projections for RTX.

Find out about the key risks to this RTX narrative.

Another View: DCF Model Paints a Different Picture

While analysts see RTX as modestly undervalued based on their price target, our DCF model tells a different story and indicates the shares might actually be overvalued. Which perspective will prove more accurate as the year unfolds?

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

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 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own RTX Narrative

If you see things differently or want to dig deeper into the numbers, you have the tools to build your own perspective in just a few minutes. So why not do it your way?

A great starting point for your RTX research is our analysis highlighting 3 key rewards and 3 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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