• If you are wondering whether RTX stock still offers fair value after its strong run, or if expectations have already been priced in, this article breaks down what the current valuation signals are really saying.
• RTX shares last closed at US$175.68, with the price down 0.6% over the past week and 13.4% over the past month, while still sitting on a 31.8% gain over the past year and 93.9% over three years.
• RTX has been in focus recently as investors reassess major defense and aerospace contractors, with attention on contract pipelines, geopolitical demand for defense equipment, and long term spending priorities. This backdrop has helped frame how the market is currently weighing RTX's risk profile and potential.
• Simply Wall St's valuation checks give RTX a 4 out of 6 value score. This suggests parts of the stock look attractively priced while others call for closer inspection. The next sections will walk through the main valuation methods before finishing with a broader way to put those numbers in context.

Approach 1: RTX Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes the cash RTX is expected to generate in the future and discounts those cash flows back into today’s dollars to arrive at an estimate of what the stock could be worth right now.

RTX has last twelve month Free Cash Flow of about $7.6b. Analysts and model estimates project Free Cash Flow rising to $12.98b by 2030, with intermediate projections such as $8.58b in 2026 and $9.92b in 2027. Simply Wall St uses these analyst inputs for the next few years and then extends the series using its own assumptions to build a 2 Stage Free Cash Flow to Equity model.

When those projected cash flows are discounted back to today, the DCF model arrives at an estimated intrinsic value of $168.81 per share. Compared with the recent share price of $175.68, this implies RTX is trading at about a 4.1% premium to that DCF estimate, which is a relatively small gap and within a reasonable margin of error for this kind of model.

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

For a profitable company, the P/E ratio is a useful way to check what you are paying for each dollar of earnings. This is often how the market weighs established businesses like RTX.

What counts as a "normal" P/E will vary. Higher growth and lower perceived risk usually justify a higher multiple, while slower growth or higher uncertainty tend to pull it down. Context therefore matters when you compare RTX’s P/E to the wider Aerospace & Defense industry.

RTX currently trades on a P/E of 32.61x. That sits below the peer average of 54.27x and slightly below the Aerospace & Defense industry average of 35.40x. Simply Wall St also estimates a proprietary “Fair Ratio” of 37.08x for RTX, which reflects factors such as earnings growth, profit margins, industry, market cap and risk profile.

This Fair Ratio is more tailored than a simple comparison with peers or the industry because it adjusts for RTX’s specific characteristics rather than assuming all companies deserve the same multiple.

With the current P/E of 32.61x below the Fair Ratio of 37.08x, the stock screens as undervalued on this metric.

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. Meet Narratives, a simple way to link your view of RTX’s story to a set of numbers. You outline what you think happens to its revenue, earnings and margins, translate that into a fair value, then compare that fair value with today’s price. This can all be done using an accessible tool on Simply Wall St’s Community page that updates as new news or earnings arrive. One investor might build a bullish RTX Narrative around the US$242 analyst target, while another leans on the more cautious US$180 view, giving you a clear, side by side sense of how different perspectives on the same company lead to different conclusions about whether the current US$175.68 price looks attractive or stretched.

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.