New quarterly report expected Apr 21, 2026. Report will refresh after results.
R
RTX Corporation
RTX · Industrials
Q4 FY2025
Earning ended Dec 31, 2025Report generated Mar 11, 2026
Every GTF Delivered Today Is a Thirty-Year Parts Annuity
Most investors are pricing RTX as a defense contractor recovering from an engine crisis; what they're underweighting is that the GTF crisis paradoxically validated the moat — airlines couldn't leave even when they desperately wanted to — and every aircraft delivered into service from here extends a parts and services franchise that no competitor can enter for a generation.
Flowly Score
Apr 16 Close
+56%$195.85
Fair Value
$305.00
69
Strongat $195.85
Business Strength7/10
The razor-and-blade aftermarket model is genuinely exceptional — switching costs are structural, not circumstantial — but the GTF quality failure exposed real operational fragility at Pratt & Whitney, and the management credibility deficit from successive upward estimate revisions takes years of clean execution to rebuild.
Financial Resilience7/10
OCF consistently outpacing net income is the hallmark of real earnings quality, and the 2023 crisis proving GTF charges were mostly non-cash rather than cash-destructive was a crucial validation; the Altman Z in gray-zone territory and $39B debt load are the legitimate counterweights, though the debt is trending in the right direction.
Growth & Trajectory7/10
A record backlog, GTF AOGs down sharply, MRO output surging, and NATO rearmament driving Raytheon's international mix higher all point to a business accelerating into structural tailwinds — the 2025 FCF step-change is almost certainly real, not a mirage, and the installed base compounds the growth runway with every new engine delivered.
Valuation7/10at $207.00
Every DCF scenario — including the pessimistic one — returns a fair value above current price, and a business with thirty-year aftermarket tails, a $268B backlog, and genuinely improving FCF trajectory arguably deserves to trade at a premium to its five-year multiple history; the risk is trusting the new FCF run rate before it's been sustained for multiple years.
Risk5/10
The asymmetric threat isn't competition — no competitor can replicate Pratt's installed GTF base or Raytheon's Patriot sustainment relationships — but a second systematic GTF defect post-remediation or sustained U.S. defense budget pressure targeting Raytheon programs specifically could damage both near-term economics and the multi-decade aftermarket tails that anchor intrinsic value.
The investment case rests on a mismatch between how RTX looks on a trailing basis and what it actually is structurally. The years of GTF-distorted earnings have trained the market to treat this as a troubled industrial, but the underlying architecture is a long-duration annuity business: Pratt & Whitney sells propulsion access once and collects thirty years of parts and overhaul revenue from the same airframe. Collins runs an identical playbook in avionics. Raytheon adds a defense sustainment tail on top. The DCF math, even under punishing assumptions, reflects this durability — the business earns its way back above the current price across multiple scenarios, which is not typical of companies trading above thirty times earnings. The trajectory is the more compelling story than the current snapshot. The GTF fleet is still in early innings of its deployment curve — every incremental narrowbody delivered globally over the next decade is another node in Pratt's aftermarket network, and that network gets stickier, not weaker, as the installed base grows. Raytheon's international backlog climbing toward half of total reveals a world that is permanently repricing the need for hard power, and each new country deploying Patriot or AMRAAM becomes a multi-decade sustainment customer. The FCF step-change in 2025 looks dramatic because the comparison period was burdened by GTF cash remediation — but the $8-plus billion run rate the company is guiding toward reflects real normalization, not financial engineering. The single biggest specific risk is a second systematic manufacturing defect in the GTF program after the current remediation concludes. If a new failure mode surfaces once the powder metal inspections are complete, the financial damage would be severe, but the strategic damage would be worse: airline confidence in Pratt & Whitney for the next narrow-body generation aircraft selection could shift permanently to CFM, foreclosing the aftermarket franchise on future fleets that don't yet exist. That is the scenario worth stress-testing — not competition, not defense budgets, but another quality control failure in the one program that defines the commercial side of the business.