RTX raised its 2026 outlook, and its $340 billion order book is a record. Take out about $0.28 a share of one-time tariff refunds and the stock costs about 23 times next year's earnings. That leaves a twelve-month target of $194.79.
Key points
- $340 billion of orders on the books, a record, with missile contracts for Tomahawk, AMRAAM and SM-6 that run for years.
- $0.28 a share of 2026 adjusted EPS comes from one-time refunds of tariff costs, so core earnings are near $7.42.
- 23.5 times my 2027 core EPS of $8.24 is the price, against a 10-year Treasury yield above 5%.
The call
The price already assumes strong growth. At $193.34, RTX trades at 21 times 2028 earnings only if core profit grows about 11% a year from here. That is a fair estimate for an aerospace leader. It is not a cheap one, and the Q3 beat leans on refunds that will not come back.
Quarterly revenue ($ billions) and GAAP operating margin (%)Source: RTX 10-Q and 10-K XBRL filings, through Q3 2026 (filed Oct 20, 2026)
I think growth of about 11% is right, so the stock should track the market. Engine and parts repair and missile production underpin the gains. Airline traffic dipped 0.8% in August, and jet groundings from engine inspections (planes parked while their engines wait for repair) held flat in Q3, so upside to that growth is limited. The new missile contracts ramp mostly in 2028 and later.
Valuation
| Step | Figure |
|---|
| 2026 adjusted EPS, guidance midpoint | $7.70 |
| Less one-time tariff refunds | $7.42 core |
| 2027 EPS at 11% growth | $8.24 |
| 2028 EPS at 10% growth | $9.06 |
| Multiple on 2028 EPS | 21.5 times |
| Target | $194.79 |
21.5 times is about what the stock pays now, and it is fair for a company growing earnings at about 10% a year while bond yields sit above 5%. Each turn of the multiple moves the target about $9. The setup is balanced, so this is a hold.
Target price by multiple on my 2028 EPS of $9.06 ($ per share)Analyst estimates, Oct 20, 2026; price $193.34
Risks
- High jet fuel prices make airlines fly less and cut repair spending. Watch IATA traffic and Pratt aftermarket growth.
- Defense budget delays slow the missile ramp. The current funding stopgap (a continuing resolution) lasts only to December 11.
- Bankrupt customers or new engine-inspection costs hit Pratt. Watch the January 2027 guidance.
What would change my mind
January guidance for 2027 core EPS well above $8.50, or grounded GTF jets falling sharply, would make this a buy.