RTX (RTX) reported second quarter 2026 earnings and revenue ahead of Wall Street expectations, raising full year guidance for sales, adjusted EPS and free cash flow on the back of a record US$289b backlog.

RTX shares have responded strongly to the earnings beat and guidance upgrade, with a 1-day share price return of 7.33%, contributing to a 90-day share price return of 20.03% and a 1-year total shareholder return of 36.90%. This points to solid positive momentum over both shorter and longer periods.

If RTX’s move has you watching defense and aerospace more closely, this can be a good moment to see what else is gaining traction across 35 power grid technology and infrastructure stocks

Bulls point to RTX’s record US$289b backlog, raised guidance and strong recent returns, while bears worry the stock now prices in too much good news after the post earnings jump. How stretched does the valuation look?

Most Popular Narrative: 3% Undervalued

RTX closed at $209.16, fractionally below the most followed fair value estimate of about $216. This frames the current debate around how much good news is already reflected.

Robust and growing backlog, highlighted by a 1.86 quarter book-to-bill ratio, $236 billion backlog (up 15% year-over-year), and major new international contracts (e.g., EU, MENA, Asia-Pacific) indicate RTX is well-positioned to benefit from sustained increases in global defense spending and heightened geopolitical tensions, setting up strong visibility for future revenue growth.

Want to understand why this backlog matters so much for RTX? The fair value hinges on how that order book converts into higher earnings and a richer profit profile. Curious which revenue path and margin lift the narrative assumes to justify a premium earnings multiple and a higher long term cash flow stream?

Result: Fair Value of $216 (UNDERVALUED)

However, RTX’s story can change quickly if jet engine reliability issues trigger higher warranty costs or if defense budgets shift away from large hardware programs.

Next Steps

With RTX attracting both optimism and concern, it helps to look past the headlines and weigh the trade off between risks and rewards for yourself. Start by checking the balance of 3 key rewards and 1 important warning sign.

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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.