RTX Corporation

What is RTX

There is a business that earns equally whether commercial aviation is thriving or a geopolitical crisis is driving defense budgets upward. When European governments started spending more on missiles after Russia invaded Ukraine, RTX benefited. When airlines order new aircraft and need engines and avionics, RTX benefits. When the US military needs Tomahawk cruise missiles for operations in the Middle East, RTX benefits.

RTX Corporation, a product of the 2020 merger between Raytheon Technologies and United Technologies, is the world's largest aerospace and defense company. It operates through three segments: Pratt and Whitney, which makes commercial and military jet engines. Collins Aerospace, which supplies avionics, cockpit systems, and other aircraft components. Raytheon, which makes missiles, air defense systems, radars, and electronic warfare systems.

What the numbers actually look like

Full-year 2025 sales were $88.6 billion, up 10% year on year. Adjusted earnings per share reached $6.29, also up 10%. Free cash flow hit $7.9 billion, up $3.4 billion versus 2024. The company ended 2025 with a total backlog of $268 billion, including $161 billion in commercial orders and $107 billion in defense contracts.

Q1 2026 continued the trajectory. Revenue of $22.1 billion, up 9% year-on-year. Adjusted EPS of $1.78, up 21%. The company raised its full-year 2026 revenue guidance to $92.5 to $93.5 billion and lifted adjusted EPS guidance to $6.70 to $6.90. Free cash flow for 2026 is guided at $8.25 to $8.75 billion. Backlog expanded further to $271 billion.

Each segment is performing. Collins Aerospace delivered Q1 2026 revenue of $7.6 billion, up 10% organically. Commercial original equipment revenue grew 15%, and commercial aftermarket revenue grew 7%, driven by higher air traffic volumes and fleet expansion across global airlines.

Pratt and Whitney reported Q1 revenue of $8.2 billion, up 10% organically. The commercial aftermarket grew 19% as airlines increased flight hours. Military engine output is being ramped to meet F-35 program requirements.

Raytheon posted Q1 revenue of $8.2 billion, up 11%. Munitions output is running more than 40% above year-earlier levels. RTX signed framework agreements with the US Department of Defense covering Tomahawk cruise missiles, AMRAAM air-to-air missiles, and the Standard Missile family, with management describing these as firm demand signals supporting production ramps well above current rates over the next decade.

The geopolitical tailwind

The conflict environment from 2024 to 2026 has been unambiguously positive for RTX's defense segment. The Strait of Hormuz crisis, ongoing NATO rearmament commitments following Russia's war in Ukraine, and US defense budget increases have all translated into accelerating order intake. European defense spending as a percentage of GDP is rising across multiple allied nations, and preferred procurement choices for allied air defense systems frequently involve Raytheon components or complete systems.

This is a structural shift, not a cyclical event. After decades of declining real defense budgets following the Cold War, the global security environment has turned permanently more hostile to the assumption that Western democracies can maintain security at minimal cost. NATO members are now politically committed to meeting and exceeding 2% of GDP defense spending targets. That commitment creates a decadal demand pipeline for Raytheon's products.

The commercial aviation angle

Aviation recovered strongly from the COVID disruption, and global air traffic is at record levels. Airlines that deferred aircraft orders during the pandemic are now accelerating fleet renewal. New narrowbody aircraft from Airbus and Boeing use Pratt and Whitney or CFM engines, and the aftermarket revenue that follows each engine sale is extraordinarily high-margin and predictable. Collins Aerospace avionics are on virtually every commercial aircraft sold.

This is the structural advantage of RTX's portfolio: defense spending and commercial aviation spending do not move in the same direction at the same time under normal conditions, creating natural diversification. Right now, both are up, hence RTX's Q1 EBIT margin of 13.7% was above management's own projections.

Valuation and SA relevance

At a forward EV/EBITDA of roughly 13 to 14x, RTX trades at a modest premium to its historical average but below where purely defense-focused peers like Lockheed Martin and Northrop Grumman trade. Free cash flow of $8 to $9 billion on a business generating $90 billion in revenue gives substantial capacity for share buybacks and dividends. The dividend has been consistently raised and currently yields approximately 2%.

For South African investors, RTX (NYSE: RTX) is accessible through platforms like EasyEquities . It is a genuinely global business with no direct SA exposure, making it a hard-currency diversifier with exposure to two of the most durable structural spending trends of the next decade.

RTX is not a high-growth story. It is a compounding machine with a decades-long visible revenue pipeline, disciplined capital allocation, and structural tailwinds in both its major segments.

Investor Takeaway

RTX's $268 billion backlog is essentially locked revenue extending years into the future. The commercial aerospace recovery and the global defense rearmament cycle are both intact and unlikely to reverse in the near term. Free cash flow generation of $8 to $9 billion annually funds shareholder returns while funding the growth capex. For investors looking for a quality, cash-generative US equity with geopolitical tailwinds, RTX belongs on the radar.