By Anton Ladnyi, CFA · ex-Goldman Sachs · ex-J.P. MorganPublished Updated
RTX — record $271B backlog confirmed; AIM-9X Block II $1.1B Navy contract (June 26, 2,500 missiles/year for US + 35 allied nations); Jefferies upgraded to Buy $220 PT (June 4) on Pratt margin recovery + sensor-led growth through 2028; FY2026 guidance raised $92.5-93.5B revenue / $6.80-6.90 EPS (+21% YoY); Iran conflict sustained Patriot/Raytheon demand.
RTX Price Target & Rating
RTX's grade is Buy, with moderate downside risk (CVaR -12.8%), and quality metrics (net margin 8%, ROE 12%). RTX Corporation (RTX) trades at $195.89 with a valuation grade of Buy: a trailing P/E of 36.2x at a 65% premium to sector median, net margins of 8.0%, a DCF-implied intrinsic range of $171–$243 suggesting a +6% margin of safety, beta 0.30 (defensive risk profile).
DCF Valuation Range
Key Takeaways
Valuation: Buy grade — P/E 36.2x — DCF range $171–$243 implies +6% margin of safety
Risk: CVaR -12.8% (95th percentile, 1-month) indicates moderate tail exposure; beta of 0.30 amplifies broad market moves in both directions
Strengths: Size 4.5/5, 8% net margin, 12% ROE dominate the factor profile
Catalyst: AIM-9X production ramp to 2,500/year; P&W margin expansion Q2+ 2026; SPY-6 production contract follow-on beyond LRIP; next Patriot sovereign customer announcement; Q2 2026 EPS delivery vs $6.80-6.90 guidance
Anton Ladnyi, CFA · A.L. Capital AdvisoryUpdated 2026-07-16
Rating Rationale
RTX — record $271B backlog confirmed; AIM-9X Block II $1.1B Navy contract (June 26, 2,500 missiles/year for US + 35 allied nations); Jefferies upgraded to Buy $220 PT (June 4) on Pratt margin recovery + sensor-led growth through 2028; FY2026 guidance raised $92.5-93.5B revenue / $6.80-6.90 EPS (+21% YoY); Iran conflict sustained Patriot/Raytheon demand.
Investment Thesis
↑ Bull Case
Q1 2026 adj EPS $1.78 vs $1.52 consensus — strongest beat among US defence primes; revenue $22.1B (+10% organic); guidance raised: $92-93B revenue, adj EPS $6.60-6.80, FCF ~$7B+
Record $271B backlog ($162B commercial, $109B defence) — 4+ years of defence revenue coverage; Patriot, LTAMDS, Stinger in extreme demand
$515M SPY-6 family of radars contract (June 3, 2026): sole-source Navy award for Flight IIA destroyer upgrades + German Navy FMS; SPY-6 on track for 50+ US Navy ships over next decade
Patriot restocking supercycle: Iran conflict (2026) consumed ~800 PAC-3 interceptors in 5 days vs US annual production of ~750 units — PAC-3/MSE line up 8x in FY2027 proposed budget; Poland €9B+ programme; years of pent-up restocking demand
LTAMDS: $904.6M Army contract; cumulative value ~$5.3B; multiple European customers queued; Tomahawk >1,000/year, AMRAAM >1,900/year expansion frameworks
AIM-9X Block II $1.1B Navy contract (June 26): 2,500 missiles/year for US and 35+ allied nations with majority work in Tucson AZ; complements Patriot/THAAD demand surge from Iran conflict — RTX is the primary beneficiary of all three major US missile defence systems
Record $271B backlog ($109B defense + $162B commercial) with book-to-bill 1.14; Jefferies upgrade to Buy $220 PT (June 4) cites 5% EPS estimate increases 2026-2028 driven by Pratt & Whitney margin recovery and sensor-led defence growth — dual civilian and military tailwind not fully priced at current levels
RTX earns a Buy from the model, and I agree on direction. But premium multiples concentrate the risk in execution — there is not much room for a soft quarter at 36x. The factor model flags quality as the weak link here, and it is right to. What I watch is return on capital — specifically whether the business can convert revenue growth into durable returns, not just reported earnings. That transition is the key to making the current rating look correct in hindsight. The setup that would make me more positive is a quarter that confirms the operating leverage story. The setup that would make me cautious is any signal that consensus estimates are getting ahead of fundamentals.
— Anton Ladnyi, CFA
Earnings History
RTX Earnings History — EPS Surprise Rate 2026
Quarter
EPS Est.
EPS Actual
Surprise
Q1 2026
$1.52
$1.78
+16.9% ✓
Q4 2025
$1.47
$1.55
+5.3% ✓
Q3 2025
$1.41
$1.70
+20.6% ✓
Q2 2025
$1.43
$1.56
+9.5% ✓
Quarterly EPS — Estimate vs Actual
Earnings Projections
RTX Forward EPS Consensus Estimates 2026
Quarter
EPS Est.
YoY EPS
Analysts
Q2 2026
$1.66
+6.4%
18
Q3 2026
$1.73
+1.7%
18
Q4 2026
~$1.75
+12.9%
23
Q1 2027
~$1.90
+6.7%
23
~ Estimated from annual consensus — not a direct analyst survey
RTX — P/E 36.2x · Beta 0.30 • Quantitative grade: Hold • CVaR from one-year daily history · historical simulation
DCF Scenario Analysis
Hover each scenario for detail · current price $195.89
▼
Bear Case
$138
-29.6%
Fwd P/E: 19.6x
3% revenue CAGR · 17.5x exit multiple
◆
Base Case
$215
+9.8%
Fwd P/E: 30.5x
9% revenue CAGR · 20.5x exit multiple
▲
Bull Case
$280
+42.9%
Fwd P/E: 39.8x
13% revenue CAGR · 23x exit multiple
Pairwise Correlation Matrix
3 of 10 peer pairs correlated above 0.60 — diversification benefit within this cluster is structurally limited.
Extended Analysis — Buy, Hold or Sell? Risk Factors. Portfolio Fit.
Is RTX a buy, hold, or sell?
RTX carries a valuation grade of Buy. The trailing P/E of 36.2 sits 65% above the Industrials sector median of 22.0x — a premium that demands sustained earnings delivery. Our discounted cash flow model produces an intrinsic range of $171–$243 — implying a +6% margin of safety at the current price of $195.89. The width of the DCF range reflects genuine uncertainty in the terminal growth rate assumption: the correct framework is a probability-weighted distribution over scenarios, not a single point estimate. See the DCF valuation framework for full methodology.
With a 12% beat rate on recent quarters, earnings predictability has been mixed. The most recent quarter delivered a 16.9% earnings surprise. Analyst estimate revisions are trending upward.
What are RTX's key risk factors?
With a beta of 0.30, RTX exhibits a low-volatility risk profile relative to the broad market. The 95th-percentile CVaR of -12.8% on a one-month horizon should inform position sizing directly: at a 10% portfolio weight, this tail event contributes approximately 1.3% of total portfolio loss in the worst 5% of months. Net margins of 8.0% fall below the Industrials sector average of 11%, suggesting margin pressure. The balance sheet is conservatively leveraged at 57% debt-to-equity.
Implied volatility of 2.1% is below realized volatility of 29.2%, potentially making options relatively cheap. Insider transactions show net buying of $36.6M over the trailing period, a signal often associated with management confidence. Short interest is low at 1.2% of float, suggesting limited bearish conviction.
How does RTX fit in a diversified portfolio?
At typical HENRY portfolio weights — 10–20% of the equity allocation — RTX carries a beta of 0.30, meaning it amplifies broad market moves proportionally. The appropriate weight is not a function of conviction alone, but of the full covariance structure across all buyings. See the Ledoit-Wolf covariance framework for the methodology behind these calculations.
Among closely correlated names, RTX shows the strongest co-movement with LHX (0.63), NOC (0.58), GD (0.53). Investors seeking diversification should note these correlation dynamics when constructing multi-asset portfolios.
True portfolio risk is a function of the full covariance structure across all buyings — not individual stock metrics. The Portfolio Health Check quantifies this at the portfolio level: it surfaces hidden concentration, marginal CVaR contributions, and the degree to which your overall allocation deviates from an optimal risk-adjusted mandate. The RTX analysis here is a single node in that larger structure.
RTX Corporation (RTX) carries a Buy quantitative rating from A.L. Capital Advisory, derived from Discounted Cash Flow intrinsic value analysis, five-factor model scoring (Value, Quality, Momentum, Volatility, Size), and CVaR tail risk measurement. At $195.89, the DCF midpoint margin of safety is +6% (intrinsic value range: $171 bear – $243 bull). Composite factor score: 3.1/5. Strongest factor: Volatility (5.0/5). Weakest factor: Quality (1.0/5). Trailing P/E: 36.2x. Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: Portfolio Construction Framework →
What is the average analyst target price for RTX?
Wall Street consensus target for RTX: $215.14 (+9.8% upside from the current price of $195.89). The analyst target range spans $180.00 (most bearish) to $242.00 (most bullish). Consensus recommendation: Buy. Note that analyst price targets typically reflect a 12-month forward horizon and are derived from a blend of DCF, comparable-company, and sum-of-the-parts analysis. A.L. Capital Advisory’s quantitative Buy rating is produced independently — from DCF intrinsic value, five-factor model scores, and CVaR tail risk — and does not mechanically track Street consensus. When the two diverge, the divergence itself is informative: it can reflect differences in time horizon, valuation methodology, or the degree to which the current price already discounts the consensus case. Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: Monte Carlo Simulation Framework →
How does RTX score on Value, Quality, Momentum, Volatility, and Size?
RTX five-factor scores (A.L. Capital Advisory, 1–5 scale): Value 2.0/5 (below average) — measures current price versus DCF intrinsic range and trailing earnings multiples; Quality 1.0/5 (weak) — captures profitability metrics including return on equity, net margin (ROE: 11.6%) and net margin (8.0%); Momentum 3.0/5 (neutral) — reflects recent price trajectory and earnings surprise consistency; Volatility 5.0/5 (strong) — inverse measure derived from beta, where lower historical volatility earns a higher score; Size 4.5/5 (strong) — market capitalisation rank (mega-cap $1T+ scores 5/5). Composite: 3.1/5. Factor scores above 4.0 signal a tailwind in that dimension; below 2.0 signals a material headwind. Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: Black-Litterman Model →
What is RTX's tail risk and CVaR?
The 95th-percentile Conditional Value at Risk (CVaR) for RTX on a one-month horizon is -12.8%. CVaR represents the expected average loss in the worst 5% of monthly outcomes — a more conservative tail risk measure than standard VaR, which only marks the loss threshold. Beta of 0.30 indicates below-market volatility. For reference, a diversified S&P 500 ETF carries a one-month CVaR of roughly -8% to -12% in normal market conditions; individual equity CVaR is higher due to idiosyncratic risk. At the portfolio level, what matters is the marginal CVaR contribution of each holding — not its standalone figure. The A.L. Capital Advisory Portfolio Health Check quantifies each position's marginal tail-risk contribution across your entire holdings. Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: CVaR & Tail-Risk Methodology →
What is RTX's intrinsic value and DCF price target?
A.L. Capital Advisory's DCF model produces an intrinsic value range of $171 (bear case) to $243 (bull case) for RTX Corporation (RTX). At $195.89, the midpoint margin of safety is +6% (positive = discount to intrinsic mid; negative = premium). The bear-to-bull spread reflects genuine sensitivity to the two dominant DCF inputs: the terminal growth rate and WACC. Terminal value typically accounts for 60-80% of total intrinsic value in most equity DCF models, which is why a range is more analytically sound than a point estimate. The central analytical question is not what the DCF outputs as a single number but which growth trajectory the current market price already discounts. All DCF analysis follows CFA Institute standards and is conducted by Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: DCF Valuation Framework →
What would trigger a rating upgrade or downgrade for RTX?
Upgrade trigger: Upgrade to Strong Buy on evidence of accelerating earnings surprise magnitude combined with improvement in the Value factor score — specifically if the current 36.2x P/E is supported by an upward revision to DCF terminal growth assumptions. Downgrade trigger: An earnings miss at current valuations (36.2x trailing P/E) where there is limited earnings cushion to absorb negative surprises; or a sustained reversal in the Quality and Momentum factor scores for two or more consecutive quarters. Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: Investment Policy Statement Framework →
Does RTX consistently beat earnings estimates?
RTX has beaten consensus EPS estimates in 12% of tracked quarterly periods — indicating inconsistent delivery. The most recent reported quarter beat consensus by 16.9%. Below-average earnings consistency is a primary headwind to the rating and a key watch item in the quantitative model. Earnings surprise magnitude and direction are incorporated into the Momentum and Quality dimensions of the five-factor scoring model. Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: DCF Valuation Framework →
How does RTX contribute to portfolio risk and diversification?
RTX carries a beta of 0.30 (low-volatility / defensive relative to the broad equity market). A beta above 1.0 means the position amplifies market moves in both directions at a typical portfolio weight. Strongest peer co-movement: LHX (0.63), NOC (0.58), GD (0.53). Holding RTX alongside these names in the same portfolio increases concentration risk. True portfolio risk is a function of the full covariance structure — a single stock's beta does not reveal its marginal contribution to portfolio tail loss. The A.L. Capital Advisory Portfolio Health Check quantifies concentration risk (Herfindahl-Hirschman Index), pairwise correlations, and marginal CVaR contribution across all your holdings. Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: Ledoit-Wolf Covariance Framework →
What quantitative methodology does A.L. Capital Advisory use to analyse RTX?
A.L. Capital Advisory analyses RTX Corporation (RTX) using a four-component quantitative framework grounded in CFA Institute standards. (1) DCF Valuation: projects free cash flows under bear and bull assumptions, discounts at WACC to produce an intrinsic value range with margin-of-safety calculation. (2) Five-Factor Scoring: each equity is scored 1–5 on Value, Quality, Momentum, Volatility, and Size. (3) CVaR Tail Risk: 95th-percentile Conditional Value at Risk from historical simulation of daily returns on a one-month horizon. (4) Earnings Surprise Analysis: quarterly beat rate and magnitude are incorporated into the Momentum and Quality factor scores. The current Buy rating for RTX is the output of applying this complete framework to current data. Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: DCF Valuation Framework → · CVaR & Tail-Risk Methodology →
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This analysis is produced using a systematic quantitative framework applied to market data and does not constitute investment advice. Prose commentary is AI-assisted and generated from structured quantitative inputs. All data and metrics are as of 2026-07-16 and are point-in-time estimates subject to revision without notice. CVaR figures are based on historical simulation and do not guarantee future outcomes. DCF ranges and upgrade/downgrade triggers are forward-looking statements based on current assumptions and may not materialise. Past performance does not guarantee future results. This analysis does not account for individual circumstances, tax position, or investment objectives — consult a qualified financial advisor before making investment decisions. This content is intended for informational purposes only and does not constitute regulated investment advice under MiFID II or FCA guidelines. This content is not intended for US persons or residents of jurisdictions where its distribution would be contrary to local law or regulation. This service is not directed at residents of Finland, Sweden, Norway, Denmark, Iceland, or Poland. The author may hold long or short positions in securities mentioned in this analysis. Nothing on this page represents a solicitation to buy or sell any security. A.L. Capital Advisory is an independent private advisory practice and is not affiliated with RTX Corporation.
CFA Portfolio Advisory — RTX
Discuss this analysis, position sizing, or your full portfolio mandate with Anton Ladnyi, CFA.
