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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

2. RTX's Strong 2025 Results and Promising 2026 Outlook

RTX reported robust fourth-quarter 2025 results, with adjusted sales reaching $24.2 billion, marking a 12% increase on an adjusted basis and 14% organically, driven by growth in commercial OE, commercial aftermarket, and defense. Adjusted EPS stood at $1.55, surpassing estimates of $1.47, and free cash flow was $3.2 billion. For the full year, adjusted sales were $88.6 billion, up 11% organically, with adjusted EPS of $6.29, up 10% year-over-year, and free cash flow of $7.9 billion, a significant increase of $3.4 billion year-over-year.

Publication Date: Feb -01

📋 Highlights
  • Q4 2025 Growth:: Adjusted sales rose 12% to $24.2B ($14% organic), driven by commercial OE, aftermarket, and defense segments.
  • Full-Year 2025 Free Cash Flow:: Surged $3.4B YoY to $7.9B, with record backlog of $268B (+23% YoY).
  • 2026 Guidance:: Sales projected at $92–93B (5–6% organic growth), EPS of $6.60–6.80, and free cash flow of $8.25–8.75B.
  • Defense Segment Momentum:: Raytheon's defense business improved $160M YoY, with $3B in R&D and 85% 2026 sales in backlog.
  • Capital Allocation:: $10.5B in 2026 for CapEx and R&D, alongside $3.4B in debt maturities to strengthen balance sheet.

Segment Performance and Outlook

The Collins segment is expected to see sales growth in the mid-single digits on an adjusted basis and high single digits organically, with adjusted operating profit growing between $425 million and $525 million. Pratt and Whitney sales are anticipated to be up mid-single digits on both an adjusted and organic basis, with adjusted operating profit expected to grow between $225 million and $325 million. Raytheon's sales are expected to grow mid- to high single digits, driven by land and air defense systems, with adjusted operating profit up between $200 million and $300 million.

Cash Flow and Investments

RTX expects free cash flow to be between $8.25 billion and $8.75 billion for 2026, with $10.5 billion planned for CapEx and research and development. The company is committed to making investments to support long-term demand and drive sustainable growth, particularly in the defense segment.

Valuation and Growth Prospects

With a P/E Ratio of 40.14 and an EV/EBITDA of 21.87, the market seems to have priced in significant growth expectations. Analysts estimate next year's revenue growth at 6.7%. Given the company's strong backlog of $268 billion, up 23% year-over-year, and the anticipated growth across its segments, RTX appears well-positioned to meet its growth prospects. The company's ROIC of 6.41% and ROE of 10.62% indicate a decent return on investments and equity.

Debt Management

RTX plans to pay $3.4 billion in debt maturities this year, building on the $1.1 billion payment made in the fourth quarter, further reducing debt and maintaining a strong balance sheet. This positions the company to make investments in the business while keeping its Net Debt / EBITDA at 2.1.

3. NewsRoom

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RTX's Collins Aerospace and All Nippon Airways renew FlightSense™ and MRO contracts

07:00

Source: prnewswire.com

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RTX's Collins Aerospace extends FlightSense™ contract with Singapore Airlines for Boeing 777F fleet

06:00

Source: prnewswire.com

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RTX to invest $139 million in Singapore, signing multiple MOUs with Economic Development Board

05:00

Source: prnewswire.com

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Defense Behemoths: Winners and Loser During Q4 Earnings Cycle

Feb -02

Source: marketbeat.com

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RTX's Raytheon completes successful ballistic test for U.S. Army's Next Generation Short Range Interceptor

Feb -02

Source: prnewswire.com

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RTX's Raytheon selected by DARPA to develop advanced maritime defense technologies

Feb -02

Source: prnewswire.com

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HII vs. RTX: Which Stock Is the Better Value Option?

Jan -29

Source: zacks.com

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Artisan Global Opportunities Fund Q4 2025 Portfolio Update

Jan -29

Source: seekingalpha.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

Strength

Weaknesses

Opportunities

Threats

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

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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A-Score: 5.5/10

Value: 2.3

Growth: 3.4

Quality: 5.0

Yield: 4.0

Momentum: 9.5

Volatility: 8.7

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Quality: 6.9

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A-Score: 5.1/10

Value: 2.8

Growth: 5.1

Quality: 4.5

Yield: 6.0

Momentum: 3.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

203.64$

Current Price

203.65$

Potential

-0.00%

Expected Cash-Flows