RTX (RTX) just delivered an earnings beat for Q1 2026, raised its full year profit and revenue guidance, and locked in multi year defense work, including a US$833 million SeaSparrow missile contract.

Despite the Q1 earnings beat, higher guidance, new SharpSight radar orders and the SeaSparrow contract, RTX’s recent momentum has cooled. The 30-day share price return shows a decline of 10.68%, and the year-to-date share price return shows a decline of 5.59%, even as the 1-year total shareholder return of 39.71% and 5-year total shareholder return of 135.99% indicate that longer-term performance has been much stronger.

If RTX’s defense and aerospace contracts have your attention, this is also a good moment to scan the wider sector and see which other companies stand out in our robotics and automation stock ideas through the 32 robotics and automation stocks

With RTX trading at US$176.78, supported by strong Q1 results, multi year contracts and a 7.4% higher dividend, investors may be asking whether recent share price weakness represents a potential opportunity or if the stock is already pricing in future growth.

Most Popular Narrative: 17.8% Undervalued

RTX closed at $176.78, while the most followed narrative pegs fair value at about $215, framing the current price against a higher long term expectation.

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.

Curious what assumptions sit behind that fair value gap? The narrative leans heavily on compounding revenue, rising margins and a richer earnings multiple. The detailed numbers may surprise you.

Result: Fair Value of $215.06 (UNDERVALUED)

However, this depends on RTX managing jet engine reliability issues at Pratt & Whitney and avoiding any pullback in government or allied defense budgets.

Another View: Cash Flows Paint A Tighter Picture

While the analyst narrative suggests RTX is 17.8% undervalued at around $215 fair value, our DCF model comes in lower, at $171.32. On this view, the current $176.78 price is sitting above estimated future cash flows. This raises a question: which signal matters more to you, earnings multiples or cash generation potential?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out RTX for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 51 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

Seeing mixed signals on RTX after strong contracts and valuation debates? Act while the details are still fresh and weigh both sides with the 5 key rewards and 3 important warning signs.

Looking for more investment ideas?

RTX might be front of mind today, but you do not want to miss other stocks that fit your goals just as well, or even better.

• Target steady income by reviewing companies we highlight as potential 12 dividend fortresses that may interest yield focused investors.
• Spot potential mispricings early by scanning the screener containing 23 high quality undiscovered gems before the wider market pays attention.
• Sleep easier at night by checking companies in the 72 resilient stocks with low risk scores that some investors use when aiming to reduce portfolio swings.

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.