Raytheon, an RTX Corporation (NYSE: RTX) business, completed installation of the first SPY-6(V)4 radar array at a Navy test site on Wallops Island, Virginia, on August 3.
The milestone launches a testing phase that will ultimately determine how quickly the Navy can modernize a fleet of aging destroyers currently in service.
The completion arrives at a moment when RTX is sitting on one of the largest order backlogs in its history, making the stock’s current valuation worth examining closely.
SPY-6 variants are already active on two commissioned vessels, installed on 11 ships in testing, and targeted for more than 50 ships over the next decade.
Raytheon has backed that expansion with an $800 million manufacturing investment designed to double output by 2028, underscoring the program’s long-term revenue potential.
Raytheon also serves as the primary system architect and radar provider for the Patriot system, generating recurring revenue through U.S. and international military sales, maintenance, software retrofits, and radar upgrades.
Global missile replenishment demand drove RTX’s total backlog to a record $289 billion in the second quarter, prompting management to raise full-year earnings and free cash flow guidance.
Second-quarter revenue grew 14% year over year to $24.7 billion, while EPS increased 29% from Q2 2025 to $1.57, and profit margin expanded to 11.4% from 9.9%.
Testing at Wallops Island is not scheduled to wrap up until mid-2028, meaning the SPY-6(V)4 program will remain in a test environment rather than generating full commissioned-ship revenue for some time.
The USS Pinckney (DDG 91) is only the first of what will need to be many Flight IIA destroyers backfitted before the program contributes meaningfully to RTX’s financial results.
A 14% revenue gain and a 29% jump in EPS set a high bar for future quarters, and any slippage in the multi-year test-and-backfit schedule would push expected revenue further out.
Lockheed Martin Corporation (NYSE: LMT) competes directly with RTX in the defense and sensor market, maintaining a rival radar portfolio headlined by its SPY-7, TPY-4, and Sentinel families.
The U.S. Department of Defense signed a $3 billion framework agreement with Lockheed Martin on June 30, valid through June 2031, covering engineering support and production orders for the AN/MPQ-64 Sentinel A4 radar stations.
The Sentinel A4 is designed to simultaneously track three distinct threat vectors, including manned and unmanned aircraft, cruise missiles, and artillery and mortar fire, while integrating with the military’s Integrated Battle Command System.
Hedge fund positioning in RTX climbed from 79 funds to 95 over the most recent two quarters, while Lockheed Martin funds rose from 59 to 83 over the same stretch, reflecting growing institutional appetite for both names.
Short interest remains light for each stock, sitting at 1.27% of float for RTX and 1.62% for Lockheed Martin, suggesting little organized skepticism about either company’s near-term prospects.
The more meaningful divergence between the two sits in valuation, with RTX trading at 29.94x forward earnings as of August 5 compared to 19.16x for Lockheed Martin.
That gap signals the market is already paying a significant premium for RTX’s growth trajectory relative to its closest peer in the defense radar space.
RTX’s Wallops Island milestone represents genuine progress for a radar franchise with a long runway ahead, supported by a record backlog and expanding profit margins moving in the right direction.
Converting that promise into sustainable revenue growth ultimately depends on the Navy’s testing and backfit schedule holding firm through the program’s mid-2028 completion target.
