Is RTX (RTX) Still Undervalued After Its $22.9B Missile Order?
RTX has delivered a very strong 3 year run in the share price, yet the current valuation checks send a more nuanced message, with the Discounted Cash Flow (DCF) estimate pointing to some upside while market multiples look closer to fair. Recent contract wins and investment plans have added fresh context for investors trying to decide how much of RTX’s pipeline is already reflected in the price.
- The stock has returned about 179.3% over 3 years, which puts RTX in a very different place than it was in 2021 and raises the bar for further gains to look attractive.
- A US$22.9b long term Tomahawk missile order and ongoing manufacturing expansions at Raytheon and Pratt & Whitney can support future cash flows, while execution risk on these projects and the capital tied up in new facilities may weigh on how quickly that cash comes through.
- The shares screen as a mixed picture on value, with RTX scoring 3 out of 6 on the broader checks, which points to neither a clear bargain nor an obviously expensive stock.
The issue now is whether RTX’s recent price level already reflects what the intrinsic value estimate suggests, or if there is still a reasonable discount on offer.
Scan beyond RTX and see how other defense and aerospace contractors with expanding order books and fresh capacity plans line up using our curated list of 82 resilient stocks with low risk scores.
Does RTX Look Undervalued on Cash Flow?
The Discounted Cash Flow (DCF) approach estimates what RTX is worth today based on the cash it is expected to generate in the future. RTX produced about US$10.6b of free cash flow over the last twelve months, and the model assumes those cash flows keep growing rather than shrinking. On that basis, the 2 Stage Free Cash Flow to Equity model lands on an intrinsic value of about $231 per share.
That outcome sits above the current market price, which implies the stock appears undervalued on this cash flow view. The long term US$22.9b Tomahawk missile award helps explain why projected cash flows can support a richer valuation, because it provides visibility on a sizeable portion of RTX’s future work.
On the DCF numbers alone, RTX appears undervalued relative to the cash the business is expected to generate over time.
Our Discounted Cash Flow (DCF) analysis suggests RTX is undervalued by 13.9%. Track this in your watchlist or portfolio, or discover 49 more high quality undervalued stocks.
Does RTX Look Fairly Valued on Earnings?
P/E suits RTX because earnings are still the main yardstick investors use for large, mature contractors. On this score, RTX trades at about 34.6x earnings, slightly below the Aerospace & Defense sector average of roughly 36.3x and noticeably under a peer group closer to 46.9x. That alone suggests the stock is not priced at a premium relative to similar businesses that share comparable exposure to defense and aerospace programs.
The Fair P/E Ratio calculated for RTX is about 32.8x, only a small step under where the shares change hands today. That gap is modest enough that it does not clearly flag the stock as either cheap or expensive relative to what the model expects given RTX’s size, margins and risk profile.
On earnings, RTX currently looks priced at roughly a fair level rather than clearly undervalued or overpriced.
See what the numbers say about this price — find out in our valuation breakdown.
The RTX Narrative: What Would Justify Today's Price?
RTX’s valuation story raises an obvious next question. What specific futures would make today’s price look conservative or stretched? Simply Wall St Narratives on RTX tackle that by spelling out the growth, profitability and earnings paths that would justify very different outcomes. Each scenario ties a fair value to a clear mix of potential catalysts and pressures, so you can see over time which version of RTX’s story appears to be unfolding on the Community page.
Share a narrative on RTX, provide a number-driven view on whether the Tomahawk order and recent manufacturing expansions really justify today’s pricing, and track how that thesis holds up as new results arrive.
Do you think there's more to the story for RTX? Head over to our Community to see what others are saying!
The Bottom Line
RTX screens as mildly undervalued on a Discounted Cash Flow (DCF) view, while the P/E checks point closer to an about right market verdict. That split leaves the valuation call resting on how confidently you treat future cash generation from large contracts and new facilities. Broader checks are mixed, so the key question is whether execution on the Tomahawk order and the wider expansion plan converts into cash returns quickly enough to justify paying near current multiples. The debate from here is whether that discount reflects mispricing or a fair cushion for project risk and capital intensity.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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