Raised 2026 earnings still leave the stock at twenty-five times this year. I model $8.30 of 2027 profit at twenty-four times, a $199 share, a market-like return including the dividend.
Key points
- $7.70 is the midpoint of raised 2026 adjusted EPS; the stock at $193.34 pays 25 times that figure.
- $340 billion backlog, half commercial, half defense, with $23 billion Tomahawk and $14 billion AMRAAM booked in the quarter.
- $0.25 of the $2.26 third-quarter adjusted EPS was one-time tariff recovery, not a run-rate.
The call
The price requires about $8.06 of 2027 earnings at twenty-four times to sit still. That is 5 percent growth off a 2026 year that already includes $0.25 of tariff recovery.
I believe earnings reach $8.30 as aftermarket and munitions convert, but the multiple stays near twenty-four times. That produces a $199 stock, about 3 percent above $193 plus a 1.5 percent yield.
Adjusted EPS ($ per share)- Adjusted EPS
- What $193 needs at 24x
Company 2026 guidance midpoint; 2027E is mine. Source: RTX 8-K Oct 20 2026.
Valuation
| Item | Figure |
|---|
| 2026 adj. EPS (guidance mid) | $7.70 |
| 2027E adj. EPS (mine) | $8.30 |
| Target multiple | 24 times |
| 12-month target | $199 |
| Trailing dividend | $2.82 (1.5%) |
Twenty-four times is a modest cut from 25 times this year's number because tariff receipts fade and GTF shop visits stay elevated. Upside if 2027 guidance in January is above $8.50; downside if flying hours or munitions output stall. Asymmetry is small, so the rating is hold.
Risks
- Aircraft-on-ground stays high if PW1100 output does not cut the queue in the fourth quarter.
- Missile contracts stay undefinitized and working capital absorbs cash as capacity ramps.
- Passenger traffic stays negative and airlines defer shop visits.
What would change my mind
January 2027 guidance for adjusted EPS above $8.50 with a cash conversion above 90 percent would justify a higher multiple.
Quarterly sales ($ billions)SEC 10-Q series through Q3 2026. Source: RTX filings Oct 20 2026.