RTX

RTX makes aircraft engines, aircraft systems and defense products. It reports three segments of about the same size. Collins Aerospace makes systems for aircraft, such as avionics, landing gear, cabins and power systems. Pratt & Whitney makes engines for commercial and military aircraft, such as the Geared Turbofan (GTF) for the Airbus A320neo and the F135 for the F-35 fighter.

Raytheon makes missiles, air defense systems and radars, such as Patriot, Standard Missile and AMRAAM. RTX makes money when it sells new equipment, and it makes more money over many years from spare parts, repairs and service of the engines and systems in use. Its 2025 sales were more than $88 billion, and it has more than 180,000 employees. At September 30, 2026, its backlog was $340 billion: $176 billion commercial and $164 billion defense.

The market prices RTX lower because it removed part of the war premium from defense stocks and because Pratt & Whitney still carries the cost of the GTF engine problem. The stock rose after the strong Q2 2026 report on July 23, 2026, and then it fell about 10% in the month to September 22, 2026. On that day, a report that Iran offered to reopen the Strait of Hormuz made investors expect less demand for missiles, and RTX fell about 3%. Investors also remember the powder metal problem in the GTF engine.

Pratt & Whitney expects more A320neo aircraft on the ground than normal through 2026, and it expects a cash cost of about $0.7 billion for this in 2026. For the gap to close, three things must be true. First, the new multi-year missile contracts must become funded orders and keep defense backlog growing: AMRAAM (up to $20.7 billion), SM-6 (up to $24.4 billion) and SM-3 Block IB (up to $6.3 billion) were awarded from September 25 to October 8, 2026. Second, RTX must deliver its 2026 outlook, which it raised again on October 20, 2026: organic sales growth of 10% to 11% and free cash flow of $9.0 to $9.2 billion.

Third, the number of GTF-powered aircraft on the ground must start to fall, and Pratt & Whitney margins must keep rising. The Q3 2026 report on October 20, 2026 passed the first test: backlog grew to $340 billion, with $164 billion in defense. The 2027 outlook with the Q4 2026 report in early 2027 is the next test. If these checks pass, the gap can close over the next two to four quarters.

The main risk is that a peace in the Middle East and slower US defense funding reduce the missile orders that the market expects.

1. Oct 20, 2026Passed

   Q3 2026 results: defense orders and GTFOrganic sales growth near the 8% to 9% outlook, free cash flow on track for $8.50 to $8.75 billion and a higher defense backlog pass; a lower outlook or a new GTF charge fails.Outcome: Organic sales grew 12%, defense backlog rose to $164 billion, and RTX raised its 2026 outlook, including free cash flow to $9.0 to $9.2 billion.
2. Jan 20, 2027 · est.Pending

   Q4 2026 results: 2027 outlook and GTF fleetA 2027 outlook with sales and free cash flow growth and fewer GTF-powered aircraft on the ground passes; a flat outlook or a GTF fleet plan that slips further into 2027 fails.

Every passed and failed checkpoint across all picks

• October 20, 2026RTX reported Q3 2026 results. Sales were $25.0 billion, up 11%, and up 12% organically. Adjusted EPS was $2.26, up 33%, and this included $0.25 from the recovery of IEEPA tariff costs. Free cash flow was $2.1 billion. New awards were more than $81 billion, and backlog reached $340 billion: $176 billion commercial and $164 billion defense. Pratt & Whitney took a $363 million charge for a customer bankruptcy. RTX raised its 2026 outlook to adjusted sales of $97.0 to $97.5 billion, organic growth of 10% to 11%, adjusted EPS of $7.65 to $7.75 and free cash flow of $9.0 to $9.2 billion.
• October 8, 2026Raytheon won a multi-year contract for SM-3 Block IB interceptors, valued at up to $6.3 billion.
• October 1, 2026Raytheon won a five-year contract from the US Navy for Standard Missile-6 interceptors, with two option years, valued at up to $24.4 billion.

• Part of the recent demand for missiles comes from the conflict with Iran. A peace or a reopened Strait of Hormuz can reduce the urgency of new orders. The new multi-year contracts give a maximum value, and the US Congress must fund each year of production.
• The GTF powder metal problem is not finished. Pratt & Whitney expects more A320neo aircraft on the ground than normal through 2026, and a 2026 cash cost of about $0.7 billion. Inspections, shop visit times and customer talks can make the cost higher. The SEC also investigates the company's 2023 disclosures about this problem, and shareholders have sued.
• The US Defense Contract Management Agency claims that Pratt & Whitney charged its research costs to government contracts in a wrong way. The first claim is about $1.7 billion plus $1.6 billion of interest at June 30, 2026, and the second is $1.1 billion plus interest. Pratt & Whitney says that both claims are without merit and has appealed them.
• Fixed-price defense contracts and new engine deliveries can lower margins. In Q2 2026, Pratt & Whitney commercial engine sales fell 8% because of the mix of engines, while it delivered more large engines. Supply chain problems can delay deliveries.
• Tariffs raise the cost of imported parts. RTX paid about $0.5 billion of IEEPA tariffs that the Supreme Court found unauthorized in February 2026, and it has asked for refunds, but the US government appealed the refund order on June 2, 2026.

RTX funds itself with unsecured notes of the parent company and with cash from its three segments. At September 30, 2026, total debt was $37.4 billion: long-term debt of $31.5 billion, a current part of $5.7 billion and short-term borrowings of $0.2 billion. Read more