• If you are wondering whether RTX at around US$177 per share still offers value after a strong run, the key question is how its current price compares with its fundamentals.
• The stock has returned 0.6% over the past week and 1.6% over the past month, with a 35.9% gain over the last year, although the year-to-date move is a decline of 5.5%.
• Recent headlines have focused on RTX's role within aerospace and defense, including ongoing contract activity and investor interest in companies tied to long term defense spending themes. This backdrop has kept attention on RTX as investors reassess both its potential and the risks attached to the sector.
• RTX currently has a valuation score of 4/6 based on a set of six valuation checks. The rest of this article will unpack what different valuation methods say about that score and then point you toward an even more complete way to think about value at the end.

Approach 1: RTX Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a stock could be worth by projecting future cash flows and then discounting them back to today using a required rate of return. It is essentially asking what RTX's future cash generation is worth in today's dollars.

RTX has last twelve month free cash flow of about US$7.6b. The DCF model used here is a 2 Stage Free Cash Flow to Equity approach, which takes analyst forecasts where available, then extends them further out. For example, projected free cash flow for 2030 is US$13.0b, with intermediate years such as 2026 and 2027 in the US$8.6b to US$9.9b range, all in today's reporting currency of US$.

After discounting this stream of projected cash flows back to the present, the model arrives at an estimated intrinsic value of about US$167.91 per share. Compared with the current share price of around US$177, the DCF output suggests RTX is around 5.4% overvalued, which is a relatively small gap.

Result: ABOUT RIGHT

RTX is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Approach 2: RTX Price vs Earnings (P/E)

For profitable companies, the P/E ratio is a useful way to relate what you are paying for each share to the earnings that each share generates. It helps you see how many years of current earnings the market is effectively pricing into the stock.

What counts as a “normal” or “fair” P/E depends on how quickly earnings are expected to grow and how risky those earnings are. Higher growth and lower perceived risk usually support a higher P/E, while lower growth or higher risk tend to pull it down.

RTX currently trades on a P/E of 32.85x. That sits below the peer average of 52.82x and is also below the Aerospace & Defense industry average of about 35.63x. Simply Wall St’s Fair Ratio for RTX is 37.13x, which is a proprietary estimate of what the P/E could be given factors such as earnings growth, industry, profit margins, market cap and risk profile.

The Fair Ratio is often more informative than a straight comparison with peers or the industry because it adjusts for RTX’s own characteristics rather than assuming all companies should trade on similar multiples. With RTX’s current P/E sitting below the Fair Ratio, this framework points to the stock trading at a discount to that modeled fair value.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your RTX Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St give you a clear story behind your numbers by linking what you believe about RTX, such as the analysts’ fair value of US$215.27, the most bullish target of US$242.00 or the most cautious target of US$180.00, and the underlying revenue, earnings and margin assumptions, to a forecast and fair value that is easy to track on the Community page. It updates automatically when new news or earnings arrive and helps you decide if RTX looks attractive or stretched by comparing that evolving Fair Value to today’s share price based on your own view of the company.

Do you think there's more to the story for RTX? Head over to our Community to see what others are saying!

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.