On the same night the Federal Reserve delivered a quarter-point rate hike, Jim Cramer fielded a question from a Florida caller about RTX, the parent company of Raytheon.
Cramer’s answer left little room for optimism, arguing the stock trades at 27 times earnings and that “that P E multiple … has to come down and that’s why that stock is going lower.”
He added that “buyers will come back, but they won’t come back to the same place,” signaling further downside before any meaningful recovery takes shape.
Cramer framed his comments around a broader market warning, noting the Fed’s quarter-point hike had already sent the Dow tumbling 631 points that afternoon.
He described the environment as “officially fighting the Federal Reserve,” arguing that in a rate-hiking cycle, certain sectors simply cannot hold their current valuations.
In his view, tech and pharma can survive by riding what he called an industrial revolution cycle, while financials, retail, and travel and leisure “simply don’t work.”
RTX, he argued, sits on the wrong side of a multiple-compression trade, regardless of the strength of its underlying business or recent contract wins.
The Cramer commentary arrived just days after a September 12, 2026 report highlighted RTX landing a $22.9 billion Tomahawk cruise missile deal, one of the largest missile contracts in Pentagon history.
The Department of Defense’s FY2027 weapons budget names Raytheon Missiles and Defense in Tucson, Arizona as the prime contractor for continued Tomahawk procurement and mid-life recertification under a multi-year contract.
RTX added another headline on September 15, 2026, announcing Hermeus will manufacture Pratt and Whitney’s F100-PW-229 engine under a new production licensing agreement, with Jill Albertelli named president of Pratt and Whitney.
Despite the contract momentum, RTX shares have moved in Cramer’s direction, falling 10.11% in the trailing month from $221.64 on August 17 to $199.24 by September 17, 2026.
The stock remains up 27.5% over the past year and up 165.99% over five years, reflecting the long-term strength of the defense franchise even as near-term pressure builds.
On the valuation question, Alpha Vantage pegs RTX’s trailing price-to-earnings ratio at 34 times and its forward ratio at 25 times, with diluted trailing earnings per share of $5.73 and an EV/EBITDA of 18 times.
The analyst consensus target sits at $234.82, supported by four strong buys, 11 buys, and eight holds, with zero sell ratings currently on the stock.
The business fundamentals Cramer is not disputing remain impressive, with Q2 2026 adjusted earnings per share of $1.89 beating the $1.66 consensus on revenue of $24.71 billion, up 14.5% year over year.
RTX’s total backlog reached $289 billion in Q2, up 22% year over year, with Raytheon alone booking nearly $20 billion in awards on a 2.4 book-to-bill ratio during the quarter.
Chief Executive Chris Calio noted that the base defense budget request of $1.1 trillion “represents a roughly 25% increase year over year, along with meaningful increases in funding for RTX priority programs, including Tomahawk, LTAMs, and Standard Missile.”
Management raised its FY2026 outlook to adjusted sales of $95.0 to $96.0 billion, adjusted earnings per share of $7.10 to $7.25, and free cash flow of $8.50 to $8.75 billion.
The Federal Funds target upper bound stands at 3.75% as of September 16, 2026, giving Cramer’s multiple-compression thesis a concrete policy anchor to lean on.
His argument is straightforward: higher discount rates pressure the multiples investors are willing to pay for future earnings, no matter how large or growing the backlog behind them.
