RTX’s (RTX) third-quarter financial results showed that both its main businesses – defense and commercial aerospace – are performing quite well. Moreover, the company’s backlog climbed tremendously, while its top and bottom lines both registered healthy gains. Also importantly, the Street appears to like the name again, and its valuation is quite attractive.
In light of all of these points, value investors should consider buying RTX stock.
Defense and Commercial Aerospace Businesses Both Delivered Commendable Results
In January, citing the positive outlooks of RTX’s missile and missile-defense businesses, DHI (DHI) CEO Art Zeile identified RTX as one of the top defense stocks to watch. (DHI owns ClearanceJobs).
In Q3, RTX’s missile and missile-defense businesses were indeed key contributors for the firm. Specifically, in September, Washington awarded the company a 5-year contract worth up to $20.7 billion for its AMRAAM medium-range air-to-air missiles. In August, RTX agreed to a seven-year $22.9 billion deal that involves providing the Navy with additional Tomahawk missiles. On the missile-defense side, RTX recently won two five-year deals worth more than $30 billion to provide interceptors to the Pentagon. In Q3, the company’s military business received almost $59 billion of orders, while the division’s book-to-bill ratio was an outstanding 4.57.
Turning to the commercial-aerospace business, CEO Chris Calio said on the company’s Q3 earnings call that British Airways had agreed to use RTX’s GTF engines in up to 63 of its planes. Noting that commercial orders for RTX’s airplane-parts maker, Collins, jumped 20% year-over-year (YOY) last quarter, the CEO added, “So far (in 2026), we’ve received over 800 GTF orders and commitments and have a backlog of over 8,000 engines.” Further, RTX’s overall commercial business orders in Q3 advanced “60% (YOY) across both (new products) and aftermarket” to $22 billion, he said.
For the full year, Collins, which makes parts for both commercial and military planes, expects its sales to increase around 10%, excluding the impact of acquisitions and divestitures. RTX’s Pratt & Whitney unit, which specializes in developing commercial aerospace and military aviation engines, anticipates that its top line will advance by high single-digit percentage levels in 2026, and Raytheon, the firm’s main defense business, predicts that its revenue will rise by about 13%.
Impressive Overall Q3 Results
The company’s revenue, excluding the impact of divestitures and acquisitions, jumped 12% year over year to $25 billion in Q3. Its backlog soared 36% YOY to a record $340 billion, while its earnings per share, excluding certain items, increased 17.6% YOY to $2.01.
The Street Is Becoming More Enthused About RTX, But Its Valuation Is Low
Between October 7 and the market close of October 27, RTX stock climbed a meaningful 8.3%. Additionally, based on data primarily derived from Q2 activity, institutions added 54.7 million shares and sold 45.5 million units while holding 1.11 billion shares.
On valuation, the shares’ forward P/E is 25, while its EV/EBITDA is 17.75. For the same metrics, the S&P 500 averages about 19 and 19.6, respectively. But analysts, on average, expect RTX’s EPS to climb 21.5% in 2026, while it also pays a 1.5% dividend yield. In light of these latter two points, the stock’s valuation is quite attractive.
*This article is intended to be informational only; it is not financial advice.
