Raytheon Technologies Corporation (RTX) | Investment Case

1. Company Snapshot

1.a. Company Description

Raytheon Technologies Corporation, an aerospace and defense company, provides systems and services for the commercial, military, and government customers worldwide.It operates through four segments: Collins Aerospace Systems, Pratt & Whitney, Raytheon Intelligence & Space, and Raytheon Missiles & Defense.The Collins Aerospace Systems segment offers aerospace and defense products, and aftermarket service solutions for aircraft manufacturers and airlines, as well as regional, business, and general aviation; and for defense and commercial space operations.

This segment also designs, produces, and supports cabin interior, communications and aviation systems, oxygen systems, food and beverage preparation, storage and galley systems, and lavatory and wastewater management systems; airborne intelligence, surveillance and reconnaissance systems, test and training range systems, crew escape systems, and simulation and training solutions; information management services; and aftermarket services that include spare parts, overhaul and repair, engineering and technical support, training and fleet management solutions, and information management services.The Pratt & Whitney segment supplies aircraft engines for commercial, military, business jet, and general aviation customers; and produces, sells, and services military and commercial auxiliary power units.The Raytheon Intelligence & Space segment develops and provides integrated space, communication, and sensor systems for missions, training, and cyber and software solutions to intelligence, defense, federal, and commercial customers.

The Raytheon Missiles & Defense segment designs, develops, produces, and sustains integrated air and missile defense systems; defensive and combat solutions; land- and sea-based radars; command, control, communications, and intelligence solutions; and naval and undersea sensor solutions for the U.S. and foreign government customers.The company is headquartered in Waltham, Massachusetts.

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1.b. Last Insights on RTX

RTX Corporation's recent performance was driven by strong Q3 2025 results, with 12% sales growth and adjusted EPS beat. The company's raised outlook for adjusted sales and EPS, citing increasing demand for missiles and aftermarket services, also contributed positively. Additionally, RTX's $37 billion surge in new orders, robust 1.63x book-to-bill ratio, and doubled free cash flow to $4 billion supported a positive trend. According to analysts, the company's strong operational performance and significant contract wins justify a continued Buy rating.

1.c. Company Highlights

Last Price	171.51
Change Percentage	0.12%
Open	172
Previous Close	171.31
Market Cap ( Millions)	229602
Volume	120250
Year High	181.31
Year Low	112.27
M A 50	170.66
M A 200	148.64

FCF Yield	2.28%
Dividend Yield	1.56%
ROE	10.61%
Debt / Equity	63.10%
Net Debt / EBIDTA	235.59%
Price To Book	3.56
Price Earnings Ratio	34.88
Price To FCF	43.85
Price To sales	2.67
EV / EBITDA	17.93

2. RTX's Q3 Results Exceed Expectations with Strong Organic Growth

RTX's third-quarter results reflect strong execution, with sales up 13% organically year-over-year to $22.5 billion, driven by double-digit growth in commercial OE, commercial aftermarket, and defense. Adjusted segment operating profit rose 19% year-over-year to $2.8 billion. The company's EPS came out at $1.7, beating analyst estimates of $1.41. Free cash flow was robust at $4 billion, and the company's backlog grew to $251 billion, up 13% year-over-year, with a book-to-bill of 1.63.

Publication Date: Nov -25

                                    📋 Highlights
                                    Q3 Organic Sales Growth::
                                                RTX achieved 13% organic sales growth to $22.5 billion, driven by double-digit gains in commercial OE, aftermarket, and defense segments.
Adjusted Operating Profit Surge::
                                                Segment operating profit rose 19% to $2.8 billion, with free cash flow at $4 billion, reflecting strong operational efficiency.
Full-Year Guidance Raised::
                                                Adjusted sales outlook increased to $86.5–87 billion (8–9% organic growth), with adjusted EPS of $6.10–$6.20 and $16 billion in Raytheon new orders.
Backlog Expansion::
                                                Total backlog reached $251 billion (+13% YoY), with Raytheon’s book-to-bill at 2.27 and Collins’ aftermarket channels up 13% organically.
Margin Dynamics::
                                                Raytheon’s margins exceeded 12% due to higher volumes and international mix, while Pratt & Whitney faces $150–200 million negative engine margin headwind in 2025.

                                

Segment-wise Performance

Collins' sales grew 11% organically, driven by strength across all channels, with operating profit up $98 million. Pratt & Whitney's sales rose 16% on both an adjusted and organic basis, driven by commercial aftermarket and military engines growth. Raytheon's sales grew 10% on both an adjusted and organic basis, driven by land and air defense systems. The growth at Pratt & Whitney is due to engine mix and continued delivery strength on the Collins side, driven by increased rates on 737 and 787.

Guidance and Outlook

The company raised its full-year outlook for adjusted sales to $86.5-87 billion, implying 8-9% organic growth, and adjusted EPS to $6.10-$6.20. Free cash flow guidance remains at $7-7.5 billion. RTX expects 30% MRO output growth for GTF, with a record number of gate restarts and strong material flow in critical value streams. The company reaffirmed its 2025 free cash flow guide of $7 billion to $7.5 billion, despite raising other financial expectations.

Valuation and Future Prospects

With a P/E Ratio of 35.21 and an EV/EBITDA of 18.08, the market seems to have priced in a significant growth trajectory for RTX. Analysts estimate next year's revenue growth at 6.2%. The company's strong backlog and growing international component, with 44% of the backlog now international, provide a positive outlook. Additionally, the company's expected long-term free cash flow conversion of 90-100% and a baseline free cash flow in the $8 billion, $8.5 billion range for 2026 support its growth prospects.

3. NewsRoom

RTX (RTX) Surpasses Market Returns: Some Facts Worth Knowing

Dec -04

Source:

Defense Giant's Dip: A Buying Opportunity?

Dec -04

Source: forbes.com

RTX's Raytheon announces strategic collaboration with AWS to improve services for space customers

Dec -04

Source: prnewswire.com

RTX: Structural Demand And Margin Expansion Reinforce Buy Thesis

Dec -03

Source: seekingalpha.com

RTX secures $1.6 billion sustainment contract for F135 engines

Dec -02

Source: reuters.com

RTX's Pratt & Whitney awarded $1.6 billion F135 sustainment contract

Dec -02

Source: prnewswire.com

Lagrange Labs Joins Raytheon Technologies' Supplier Network to Verify AI in Missile Defense and Fire-Control Systems

Dec -01

Source: businesswire.com

RTX's Unit Secures a Contract for Sustainment in Support of F-35 Jets

Dec -01

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.90%)

6. Segments

Collins Aerospace

Expected Growth: 6.2%

The commercial aerospace industry is expected to continue growing, driven by increasing air travel demand and the need for more efficient aircraft. Collins Aerospace is well-positioned to benefit from this trend, with its advanced technologies and strong customer relationships. The segment's growth is expected to outpace the global average, driven by the increasing adoption of its products.

Pratt & Whitney

Expected Growth: 5.5%

The global demand for aircraft engines is expected to remain strong, driven by the need for more efficient and reliable propulsion systems. While Pratt & Whitney faces intense competition in the commercial engine market, its strong presence in the military aerospace industry provides a stable source of revenue. The segment's growth is expected to be slightly below the global average, due to the cyclical nature of the commercial aerospace industry.

Raytheon

Expected Growth: 6.5%

The global defense industry is expected to continue growing, driven by increasing global security concerns and the need for advanced defense systems. Raytheon is well-positioned to benefit from this trend, with its portfolio of advanced defense systems and strong customer relationships. The segment's growth is expected to outpace the global average, driven by the increasing demand for its products.

Eliminations and Other

Expected Growth: 5.9%

As this segment is not an operating segment, its growth is not driven by business performance, but rather by the company's consolidation process. We assume a growth rate in line with the global growth hypothesis, as it is a non-operating segment and does not have a specific growth driver.

7. Detailed Products

Integrated Defense Systems

Provides integrated air and missile defense, naval and maritime systems, and undersea systems

Intelligence, Surveillance and Reconnaissance (ISR) Systems

Offers advanced sensors, payloads, and processing systems for airborne, space-based, and ground-based ISR

Cybersecurity Solutions

Provides advanced cybersecurity solutions for government and commercial customers

Avionics and Electronic Systems

Develops and produces advanced avionics, electronic warfare, and communication systems

Missile Systems

Designs and manufactures advanced missile systems for air, land, and sea-based platforms

Space and C2 Systems

Develops and produces advanced space-based and command and control systems

Forcepoint Cybersecurity Solutions

Provides advanced cybersecurity solutions for government and commercial customers

Collins Aerospace Avionics and Interiors

Develops and produces advanced avionics, interiors, and information management systems

8. Raytheon Technologies Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Raytheon Technologies Corporation's products and services have some substitutes, but they are not easily replaceable due to their high-tech nature and specialized applications.

Bargaining Power Of Customers

Raytheon Technologies Corporation's customers, primarily governments and defense agencies, have limited bargaining power due to the company's dominant position in the defense industry.

Bargaining Power Of Suppliers

Raytheon Technologies Corporation's suppliers have some bargaining power due to the specialized nature of their products, but the company's large scale and diversified supply chain mitigate this risk.

Threat Of New Entrants

The defense industry has high barriers to entry, and new entrants would face significant challenges in competing with established players like Raytheon Technologies Corporation.

Intensity Of Rivalry

The defense industry is highly competitive, with several large players competing for a limited number of contracts, leading to a high intensity of rivalry.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	43.07%
Debt Cost	4.15%
Equity Weight	56.93%
Equity Cost	6.84%
WACC	5.68%
Leverage	75.65%

11. Quality Control: Raytheon Technologies Corporation passed 2 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

L3Harris

A-Score: 6.2/10

Value: 3.0

Growth: 5.7

Quality: 6.8

Yield: 4.0

Momentum: 8.0

Volatility: 9.7

1-Year Total Return ->

Northrop Grumman

A-Score: 6.0/10

Value: 3.5

Growth: 5.9

Quality: 6.6

Yield: 3.0

Momentum: 8.5

Volatility: 8.7

1-Year Total Return ->

General Dynamics

A-Score: 6.0/10

Value: 3.6

Growth: 4.7

Quality: 6.2

Yield: 4.0

Momentum: 7.5

Volatility: 10.0

1-Year Total Return ->

Raytheon Technologies

A-Score: 5.4/10

Value: 2.3

Growth: 3.8

Quality: 5.0

Yield: 4.0

Momentum: 8.5

Volatility: 8.7

1-Year Total Return ->

HEICO

A-Score: 5.0/10

Value: 0.5

Growth: 7.3

Quality: 7.1

Yield: 0.0

Momentum: 7.5

Volatility: 7.7

1-Year Total Return ->

Lockheed Martin

A-Score: 4.7/10

Value: 2.8

Growth: 5.1

Quality: 4.5

Yield: 6.0

Momentum: 1.0

Volatility: 9.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

9.33%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

5.68%

Raytheon Technologies Corporation - US75513E1010

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on RTX

1.c. Company Highlights

Less Volatile

Higher Yield

Average Growth

Earnings Beats

Revenues Beats

Lower Growth

Stable Momentum

Expensive

Strong Momentum

2. RTX's Q3 Results Exceed Expectations with Strong Organic Growth

Segment-wise Performance

Guidance and Outlook

Valuation and Future Prospects

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.90%)

6. Segments

Collins Aerospace

Expected Growth: 6.2%

Pratt & Whitney

Expected Growth: 5.5%

Raytheon

Expected Growth: 6.5%

Eliminations and Other

Expected Growth: 5.9%

7. Detailed Products

Integrated Defense Systems

Intelligence, Surveillance and Reconnaissance (ISR) Systems

Cybersecurity Solutions

Avionics and Electronic Systems

Missile Systems

Space and C2 Systems

Forcepoint Cybersecurity Solutions

Collins Aerospace Avionics and Interiors

8. Raytheon Technologies Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Raytheon Technologies Corporation passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

171.41$

Current Price

171.41$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA