Raytheon (RTX) Stock Analysis 2026: $88.6B Revenue, Pratt & Whitney + Patriot Missiles, Q1 Earnings April 21

Raytheon (RTX) Stock Analysis 2026: $88.6B Revenue, Pratt & Whitney + Patriot Missiles, Q1 Earnings April 21

RTX (formerly Raytheon Technologies) is a $264 billion aerospace and defense company formed from the 2020 merger of Raytheon and United Technologies. Today it operates through three divisions: Pratt & Whitney (jet engines for commercial and military aircraft), Raytheon (missiles, air defense systems, advanced weapons), and Collins Aerospace (avionics, cockpit systems, interiors). The company reports Q1 2026 earnings on April 21, 2026 — tomorrow.

With $88.6 billion in trailing twelve-month revenue, RTX is one of the largest defense contractors on Earth. It powers both sides of every commercial flight cycle (engines for Boeing and Airbus aircraft) and simultaneously supplies the weapon systems that define modern air defense.

Fundamental Snapshot

Valuation Analysis: Defense Premium, Forward PE More Moderate Than Peers

Our multi-method model assigns RTX a Margin of Safety of -54.9%, indicating the stock trades above what conservative intrinsic value methods imply.

Graham Number = v(22.5 — $4.97 EPS — $48.61 book value) — $73.72 — far below the $196 current price. This reflects the significant goodwill on RTX's balance sheet from the 2020 Raytheon–United Technologies merger ($40B+ in goodwill and intangibles). Book value is suppressed relative to earnings power, making P/B analysis unreliable here.

Earnings Power Value (EPV): At 11.0% operating margin on $88.6B revenue, operating income is approximately $9.75B. Capitalized at 8% yields EPV roughly $91/share — well below the market price. The market assigns a meaningful premium for the defense cycle, GTF engine ramp, and long-term backlog visibility.

Forward PE of 28.9x is more moderate than GE Aerospace (40x) and reflects RTX's profile as a quality defense compounder with 12% revenue growth. PEG of 2.75 is elevated but not extreme for a large-cap defense prime.

Analyst consensus: The $216.02 analyst target implies +10% upside from current levels. The 52-week range ($110.76 ? $214.50) shows RTX nearly doubled from its lows and now trades near all-time highs, above both its 200-day ($177) and 50-day ($200) moving averages.

The honest picture: RTX is priced as a quality compounder in a structural defense spending upcycle. Conservative intrinsic value methods show significant negative MoS. The investment thesis requires belief that defense budgets expand, Pratt & Whitney GTF engine production normalizes, and Collins Aerospace benefits from aircraft delivery tailwinds. At 28.9x forward PE and 1.36% dividend, you are paying for quality and duration, not a discount to intrinsic value.

Pratt & Whitney: Commercial Aviation Engines and F-35 Power

Pratt & Whitney is RTX's commercial-facing engine division and a direct competitor to CFM International (the GE/Safran LEAP joint venture). P&W's flagship product is the GTF (Geared Turbofan) engine, which powers Airbus A220, A320neo, and A321neo family aircraft.

The GTF engine encountered well-documented production quality challenges: a high-pressure turbine powder metal defect required early inspection of thousands of engines in 2023-2024, temporarily grounding aircraft and forcing P&W to absorb significant inspection costs. The resolution timeline and normalization of shop visits is the primary near-term earnings watch item for P&W.

Why this matters: Every quarter that P&W successfully ramps GTF production and reduces unplanned shop visits signals normalization. The long-term addressable market is large — Airbus has 8,000+ A320neo aircraft on order, all of which are P&W/CFM engine candidates.

Military engines: P&W also produces the F135 engine powering the F-35 Joint Strike Fighter. The F135 Engine Core Upgrade (ECU) program is a multi-billion dollar modernization contract securing P&W revenues through 2040+.

Raytheon Defense: Patriot Missiles and the NATO Spending Surge

The Raytheon missile defense segment has been the standout growth driver since 2022, as global defense spending accelerated following Russia's invasion of Ukraine.

Patriot missile systems: RTX manufactures the Patriot air defense system — the standard for medium-to-high altitude air and missile defense. Ukraine, Germany, Poland, Japan, South Korea, and dozens of other nations operate Patriot. Resupply and new orders have substantially grown RTX's defense backlog.

AMRAAM (Advanced Medium-Range Air-to-Air Missile): The primary beyond-visual-range air-to-air missile for the US and NATO allies. Ukraine procurement has driven significant additional orders.

StormBreaker and precision munitions: Growing demand for precision-guided weapons across Western air forces.

Backlog visibility: RTX's defense backlog has grown to multi-year highs. The company regularly cites book-to-bill ratios above 1.0, meaning new orders exceed deliveries — providing 3-7 year revenue visibility.

Collins Aerospace: Avionics Across the Commercial and Military Fleet

Collins Aerospace provides avionics, cockpit systems, aircraft interiors, and landing systems. This segment benefits from the commercial aviation recovery — as airlines take new aircraft deliveries, Collins generates system revenues for each aircraft.

Collins also produces military C5ISR (Command, Control, Communications, Computers, Cyber, Intelligence, Surveillance, and Reconnaissance) systems, further diversifying RTX's defense exposure beyond weapons into systems integration.

Q1 2026 Earnings Preview (April 21)

Key metrics to watch when RTX reports tomorrow:

Revenue and backlog growth: Quarterly revenue growth was +12.1% YOY. New order intake (book-to-bill ratio) signals whether the defense cycle is sustained.

Pratt & Whitney GTF normalization: Any reduction in shop visits and improvement in on-wing time for GTF engines is a positive signal. Watch for updates on inspection cost timeline.

Defense margin expansion: Defense segment margins have faced pressure from fixed-price legacy contracts. Improvement here is a key catalyst for earnings acceleration.

Free cash flow: RTX targets strong FCF generation. Guidance reaffirmation or a raise would be a positive catalyst.

Dividend and buyback: RTX has maintained a consistent 1.36% dividend yield. Capital return guidance signals management confidence in the balance sheet.

Risk Factors

Valuation premium: At 39.52x trailing PE and -54.9% model MoS, there is no margin of safety for negative surprises. Multiple compression from 40x to 30x trailing PE alone implies ~25% downside without any fundamental change.

Pratt & Whitney GTF headwind: If powder metal inspections extend beyond guidance, P&W revenues and margins face additional pressure. This is the single largest near-term risk.

Fixed-price defense contract risk: RTX's Raytheon segment carries legacy fixed-price contracts. Material or labor cost increases compress margins on these contracts.

Defense budget uncertainty: US defense spending is subject to continuing resolutions and political budget debates. Delays in new contract awards impact order cadence.

Merger goodwill: The 2020 merger created substantial goodwill. Any impairment charge would reduce reported earnings significantly.

What Our Valuation Tools Show

• P/E Ratio Calculator: Forward PE 28.9x is more moderate than GE Aerospace's 40x, and more typical of defense primes at cycle peaks.
• EV/EBITDA Calculator: At 19.83x EV/EBITDA, RTX prices in defense cycle durability.
• PEG Ratio Calculator: PEG of 2.75 — elevated, but within range for a high-quality defense compounder with long backlog visibility.

Our screener gives RTX a SAVE score of 49.5/100 and risk score 31.6/100. The low risk score (meaning lower risk) reflects RTX's low beta (0.428), consistent dividend, and diversified revenue across commercial aviation engines, defense missiles, and avionics. The negative MoS reflects that the stock trades above conservative fundamental estimates.

Bottom Line

RTX is a cornerstone aerospace and defense franchise — $88.6B in revenue, Pratt & Whitney GTF engines powering the Airbus A320neo family, Patriot missiles underpinning NATO air defense, and Collins Aerospace avionics on virtually every modern commercial aircraft.

At 28.9x forward PE and 1.36% dividend, RTX prices in continued defense spending growth and Pratt & Whitney normalization. The model MoS of -54.9% means traditional value methods do not surface a discount — this is a quality-at-a-premium story, not an undervaluation opportunity. Analyst consensus of $216 implies +10% upside from $196.

The defense supercycle (NATO expansion, Pacific deterrence, Ukraine resupply) provides multi-year backlog visibility. Tomorrow's Q1 2026 earnings call is the catalyst to watch for GTF normalization updates and defense backlog confirmation.

Next earnings: April 21, 2026 (Q1 2026)

This analysis uses Equity Rank's multi-method valuation model combining Graham Number, EPV, DCF, and comparable multiples. SAVE score and MoS reflect model outputs, not investment recommendations. All data as of April 19, 2026. Not investment advice. See full disclaimer below.

Equity Rank is an independent financial research and analysis platform. We are not registered investment advisers. Nothing on this platform constitutes a recommendation to purchase, hold, or divest any security. All content is for informational and educational purposes only. Investors should conduct their own due diligence and consult a licensed financial professional before making investment decisions.