What the Urgent Defense Meeting Means for RTX’s Soaring Stock Price in 2025

Thinking about what to do with RTX stock after its remarkable run lately? You are not alone. From defense headlines to global supply threats, RTX has been at the center of market chatter, and its share price has definitely reflected the buzz. The stock closed most recently at $163.35, pushing up another 3.2% over the past week. That adds to an impressive 40.8% gain year-to-date and a massive 209.8% rise over five years. These are big numbers, suggesting strong optimism or maybe even new risks being priced in.

Recent events have certainly played a role. The urgent meeting ordered by the U.S. Defense Secretary has kept all eyes on defense contractors, while reports of a disruptive software hack at European airports highlighted the company's integral technology footprint. With so many global tensions, every headline seems to ripple straight through the RTX chart, whether it is concerns over China restricting mineral exports or news of policy shifts unlocking new international sales opportunities for U.S. military drones.

But is RTX really undervalued after this stretch? Here is where things get interesting. According to our standard valuation score, which tallies up six core checks for undervalued companies, RTX scores just a 1 out of 6. So, while momentum looks great, valuation might tell a more complicated story.

Let us break down the main valuation approaches in detail, and at the end, I will share an even smarter lens for weighing RTX’s true worth.

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

The Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by projecting its future free cash flows and then discounting those flows back to their value today. For RTX, this approach relies on detailed forecasts for coming years, combining analyst expectations with longer-term projections based on historical trends and industry estimates.

RTX’s most recent Free Cash Flow over the last twelve months is $2.4 Billion. Analyst forecasts suggest strong growth over the next several years, with Free Cash Flow expected to reach $10.6 Billion by 2029. It is important to note that while analysts provide estimates for up to five years, values further into the future are extrapolated from trends observed to date.

Based on these cash flow projections, the DCF model calculates RTX’s fair value at $128.38 per share. With the current stock price at $163.35, the DCF analysis indicates the stock is approximately 27.2% overvalued at this time.

Result: OVERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests RTX may be overvalued by 27.2%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: RTX Price vs Earnings

The Price-to-Earnings (PE) ratio is a classic valuation tool for profitable companies like RTX. It helps investors gauge how much the market is paying for each dollar of the company’s earnings, making it especially relevant when the company has a consistent track record of profitability.

Generally, a higher PE ratio can signal expectations for stronger growth ahead or lower perceived risk. In contrast, a lower PE might reflect caution about future prospects or more uncertainty. What counts as a “fair” PE depends on the company’s growth outlook, its risk profile, and typical sector valuations.

RTX currently trades at a PE ratio of 35.6x, compared to a peer average of 27.9x and an industry average of 38.1x for Aerospace & Defense. This puts RTX right between its immediate competitors and the broader sector, signaling that investors see it as somewhat of a leader, but not the priciest by industry standards.

Simply Wall St’s proprietary Fair Ratio for RTX stands at 32.6x. Unlike standard benchmarks, the Fair Ratio takes into account not just industry averages, but also factors unique to RTX like its earnings growth, risk factors, profit margins, and overall market presence. By weighing these elements, the Fair Ratio provides a more tailored and holistic view of where RTX’s PE should be.

Since RTX is currently valued at 35.6x and the Fair Ratio is 32.6x, the stock trades modestly above fair value. However, the difference is not dramatic.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your RTX Narrative

Earlier we mentioned there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is simply the story you believe about a company brought to life through numbers, capturing your expectations for its future revenue, earnings, and profit margins, and calculating the fair value that matches your view.

This tool links the big picture, such as what you think will drive RTX’s success or present risks, to a detailed financial forecast and then to a concrete fair value estimate. Narratives are easy to build and compare on Simply Wall St’s Community page, where millions of investors share and explore their perspectives.

Once you’ve crafted your Narrative, you can instantly see if RTX’s current share price looks attractive compared to the fair value from your story, making it easier to decide when to buy or sell. What is more, Narratives update automatically whenever key news or earnings are released, so your analysis is always in sync with the latest information.

For example, some investors see surging defense spending and international contracts as justification for a bullish fair value near $180, while others, mindful of tough margin risks and global supply constraints, set their fair value closer to $134. This shows just how powerfully Narratives personalize your investment decisions.

Do you think there's more to the story for RTX? Create your own Narrative to let the Community know!

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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