Missile Defense Momentum Powers RTX, Even as Airlines Face Turbulence

RTX (RTX) reported stellar first-quarter results recently, featuring a huge, 25% surge in its backlog and a 10% increase in its revenue, excluding the impact of acquisitions and divestments. Moreover, the company remains very well-positioned to benefit a great deal from America’s upcoming, huge investments in missile defense, it looks well-positioned to generate needle-moving revenue from its anti-drone product, and its valuation remains low, given its recent growth numbers.

But on the other hand, the conglomerate gets a large amount of its revenue from selling airplane engines and parts to commercial airlines. With many airlines struggling due to the standoff between the U.S. and Iran and the resulting high jet fuel prices, now is not a good time to buy RTX stock.

However, given the company’s many strong positive catalysts and its attractive valuation, RTX stock is likely to rise after the crisis in the Strait of Hormuz is resolved. Therefore, long-term investors who already own the shares should consider holding onto them.

Superb Q1 Results

RTX’s sales rose 10%, excluding the impact of acquisitions and divestments, versus Q1 of 2025 to $22.1 billion, while its earnings per share, excluding certain items, soared 21% year-over- year to $1.78 and its backlog jumped 25% YOY to a record $271 billion. Further, the firm’s free cash flow soared 65% to $1.3 billion from $792 million in Q1 of 2025.

RTX’s Missile-Defense Business and Its Counter-Drone Offering

“On the defense side, the current landscape clearly underscores the need for…integrated air and missile defense technology,” RTX CEO Chris Calio said on the company’s Q1 earnings call. Indeed, the U.S. plans to spend $185 billion on Golden Dome, the Trump administration’s anti-missile initiative, and the administration has requested $17.9 billion for the project in fiscal 2027.

Showing that RTX is continuing to benefit from the Trump administration’s prioritization of missile defense, the firm received a $400 million project from the U.S. Army for “lower-tier air and missile defense sensors.” Outside of America, Raytheon obtained a $600 million deal to supply equipment for its Patriot anti-missile system to the Netherlands. And as I reported in a previous column on RTX, published in February, the firm obtained contracts related to missile defense from Spain and Israel, worth $1.7 billion and $1.25 billion, respectively.

RTX’s drone-defense offerings, called Coyote, consist of an inexpensive missile and a number of anti-drone drones. America, Israel, and its Gulf allies all have used very expensive missiles to combat drones during the war with Iran. Consequently, all will probably be looking for much cheaper alternatives to combat drones, and many other U.S. allies will likely be in the same boat. Since RTX’s Coyote offerings can address this need, they could prove to be very lucrative for the company. Indeed, Calio reported that “the Coyote system has been in great demand.”

RTX’s Commercial Business Could Face Challenges

According to one source, “commercial aerospace and other commercial sales” generated 48.8% of RTX’s revenue last quarter. And on April 28, CNBC quoted the CEO of Ryanair, a European discount airlines, as saying that a number of European airlines will go under if jet fuel prices don’t drop.

With many airlines likely facing serious financial difficulties due to the high fuel prices, some could look to reduce their capital spending if their fuel costs don’t drop by large amounts very soon. The latter scenario, in turn, could significantly undermine RTX’s financial results.

Valuation and the Bottom Line on RTX Stock

RTX’s forward price-earnings ratio of 25 times is attractive, given the company’s strong growth and its positive, long-term outlook. But with commercial airlines’ issues clouding the company’s short-to-medium-term prospects, the shares could easily drop sharply i n the coming months. But in light of the company’s positive long-term outlook, investors who have already bought RTX stock (most of whom are likely sitting on significant profits) can hold onto their shares.

This article is intended to be informational only; it is not financial advice.