RTX holds a $340 billion backlog with strong engine service demand, but the stock at 25 times earnings leaves about 9% upside to my $210 target. I rate it hold.
Key points
- $340 billion backlog in Q3 2026 after $59 billion of defense awards in the quarter gives years of missile sales visibility.
- $0.25 per share of $2.26 profit in Q3 2026 came from tariff refunds that lifted business unit profit margins.
- $9.1 billion cash flow guide for 2026 shows strong cash conversion while refund timing flatters the year.
The call
Price looks full after the run higher. The shares trade at $193.34 per share in October 2026. That is 25 times guided profit of $7.70 per share for 2026. Core profit without tariff refunds is lower, so the true multiple is higher.
Quarterly sales with implied fourth quarter and 2027 pace ($ billions)- Reported sales
- Mine, implied pace
SEC XBRL facts and Oct 20 2026 8-K guidance, as of Oct 20 2026.
Modest upside remains on durable demand. I model sales of $105.0 billion for 2027. That supports profit of $8.40 per share for 2027. At 25 times earnings the shares are worth $210.00 per share in 12 months. That is my target.
What the target is worth at different multiples ($ per share)My arithmetic on $8.40 of 2027 profit, as of Oct 20 2026.
Valuation
| Driver | Estimate |
|---|
| 2026 guided sales | $97.3 billion for 2026 |
| 2027 sales, up 8 percent | $105.0 billion for 2027 |
| 2027 adjusted profit | $8.40 per share for 2027 |
| Target multiple | 25 times earnings |
| 12-month target | $210.00 per share |
| A 25 times multiple blends fast engine service work with steady defense work. Engine service means paid repair and parts for flying engines. It sits below pure service peers and above slow defense primes. Single digit upside plus a 1.5 percent dividend yield keeps this a hold. | |
Risks
- Airlines may cut flying on high fuel costs, which would show in falling flight hours and slower engine repair visits.
- Missile ramp may stall on parts shortages, which would show in weak material receipts and flat munitions output.
- Defense funding may slip under a temporary funding deal, which would show in smaller bookings and slow contract awards.
What would change my mind
Faster engine repair growth with fewer grounded jets plus firm missile funding would lift my profit and multiple view.