RTX Corporation (RTX) has surged back into investor focus after its Raytheon business secured a massive US$22.9 billion, seven-year contract from the U.S. military.
The deal calls for a dramatic ramp in Tomahawk cruise missile production, scaling output from just 60 units annually all the way up to 1,000 units per year.
RTX shares were trading at US$212.08 following a strong recent run that has attracted fresh scrutiny over whether the stock still offers value at current levels.
The company has posted an 18.05% share price return over the past 90 days and a 13.26% year-to-date gain, reflecting growing investor confidence in its defense growth trajectory.
RTX’s one-year total shareholder return of 33.96% points to sustained momentum that aligns closely with a string of contract wins and significant capacity expansion announcements.
The most widely followed valuation narrative places RTX’s fair value at $232.27, suggesting the stock is approximately 8.7% undervalued relative to its current trading price.
That figure is built on detailed revenue and margin assumptions alongside a discount rate of 8.23%, providing a structured framework for assessing whether today’s share price reflects the company’s long-term earnings potential.
RTX’s backlog picture is compelling, with the company reporting a 1.86 quarter book-to-bill ratio and a total backlog of $236 billion, representing a 15% increase year-over-year.
Major new international contracts spanning the EU, MENA region, and Asia-Pacific markets indicate that RTX is well-positioned to capitalize on sustained increases in global defense spending driven by heightened geopolitical tensions.
The $236 billion backlog provides strong forward revenue visibility and supports the case that RTX’s earnings growth profile remains intact well beyond the current fiscal year.
However, the company is not without its risks, and analysts point to potential setbacks on Pratt & Whitney engine costs as a meaningful concern that could weigh on margins.
Any shift in U.S. or allied defense budgets that slows the flow of new contracts could also disrupt the momentum that has helped drive RTX’s recent outperformance in the market.
The core tension for investors is straightforward: paying a premium today risks overpaying if growth assumptions disappoint, while waiting could mean missing further upside if the valuation case holds together.
With a backlog growing at double-digit rates and a landmark production contract now locked in, RTX appears to carry more fundamental support than its current share price fully reflects.
