TenQ

The RTX story

RTX makes aircraft systems, jet engines and missile defenses, with growth depending on converting its expanding backlog into cash while Pratt & Whitney works through its powder metal recall.

Written from RTX's own filings with the SEC, and rewritten when it publishes a new earnings release. Updated 2026-09-30.

  • $187.66share price, last close
  • $252.9Bmarket value
  • 20/36TenQ Score checks passed
  • 9.7%growth a year the price assumes

The story in brief

  • Orders support expansion. Backlog reached $289 billion in the quarter to June 2026, including $170 billion in commercial orders and $119 billion in defense orders.
  • Growth spans the businesses. Sales reached $24.7 billion in the quarter to June 2026, up 14 percent from a year earlier, with operating margin expansion across all three segments.
  • Cash expectations are higher. The reverse DCF implies free cash flow after stock pay growing 9.7% annually for ten years, compared with 0.2% annually over the last 10 years.

What drives the business

  • RTX combines Collins Aerospace aircraft systems and services, Pratt & Whitney engines, and Raytheon missile defenses, linking original equipment programs to ongoing parts, maintenance and government contracts.
  • Boeing and Airbus together accounted for 16% of Collins sales before discounts and incentives in 2025, when Collins secured over $4 billion in combined long-term airline maintenance and spare parts agreements.
  • Airbus accounted for 29% of Pratt & Whitney sales before discounts and incentives in 2025, while Pratt exclusively powers Lockheed Martin's F-35 and received a $2.8 billion contract action for F135 engine production and advance funding.
  • Raytheon's programs include Patriot, Standard Missile and AMRAAM, with higher volume across these programs helping lift its sales 18 percent in the quarter to June 2026.
  • Commercial aftermarket sales grew 10 percent at Collins and 25 percent at Pratt & Whitney in the quarter to June 2026, supporting demand beyond new aircraft production.

What the price assumes

At $187.66, the reverse DCF implies that free cash flow after stock pay grows 9.7% a year for ten years using a 10.2% discount rate.

RTX delivered 0.2% annual growth in that cash measure over the last 10 years, while the TenQ check sets a 2.1% bar, substantially below the implied pace.

Revenue grew 11.8% over the last twelve months and free cash flow reached $11.4 billion, but recent sales growth does not establish the sustained growth in cash after stock pay embedded in the price.

Value RTX on your own assumptions

What could change the story

  • Pratt & Whitney's powder metal issue requires accelerated engine removals and inspections, leaving repair execution and the scope of affected engines important uncertainties.
  • Pratt's commercial original equipment sales fell 8 percent in the quarter to June 2026 despite increased large commercial engine deliveries, showing how engine mix can offset higher production.
  • Total debt of $37.2 billion compares with $9.0 billion in cash and short-term investments, while the liquidity ratio of 1.01 falls below the TenQ check's 1.50 bar.
  • Return on employed capital of 9.5% falls below the TenQ check's 10.0% bar, making the profitability of capacity expansion important as RTX works through its backlog.
  • Government spending changes, contract cost control and approvals for international defense contracts could affect Raytheon's ability to turn orders into revenue and profit.

What to watch next

  • RTX's raised outlook for 2026 calls for organic sales growth of 8 to 9 percent, making subsequent segment growth and backlog conversion key measures of delivery.
  • Subsequent free cash flow releases will show progress toward the raised outlook for 2026, following $2.9 billion in the quarter to June 2026.
  • Pratt & Whitney's engine inspection progress, commercial aftermarket growth and adjusted operating margin will show whether repair demands and increased engine deliveries can coexist with stronger profitability, following an 8.3% adjusted margin in the quarter to June 2026.

Sources

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