RTX Corporation (RTX)

Business Overview

RTX sits between the platform primes, contractors built around one flagship weapons programme, and pure commercial aerospace suppliers. FY2025 net sales were $88,603M, split roughly 52% defence (~$46.1B) and 48% commercial (~$42.5B). Backlog totalled $268B at 31 December 2025: $107B defence and $161B commercial. Book-to-bill, new orders divided by revenue recognised in the period, was 1.56x company-wide on more than $138B in new awards, the strongest filed ratio among the six primes. Market capitalisation was roughly $242B as of 10 June 2026 (~1.35B shares × $181.56).

Three segments carry the economics. Collins Aerospace led at 16.3% return on sales; Pratt & Whitney lagged at 7.9%. Raytheon (missiles and defence electronics) printed 11.5% on the defence side. Consolidated segment ROS, the same return-on-sales measure, was 11.8%. RTX does not disclose single-programme revenue share at the consolidated level. GTF and Patriot are material programmes, but no filed percentage exists.

The backlog guide uses RTX's 1.56x as the highest of the six primes' FY2025 book-to-bill ratios. The commercial backlog ($161B) is larger than the defence backlog ($107B), which changes how you read budget-cycle exposure relative to a company like Lockheed Martin at ~99.6% government revenue.

How the Numbers Read

Cash ran ahead of earnings in FY2025: $7,940M FCF on $6,732M net income, 118% conversion, above the 90% level this site treats as strong.

RTX's two revenue streams mean defence budget cycles only move half the business. An 11.8% increase in the FY2026 US DoD request ($961.6B against FY2025 enacted $860.1B) flows through the defence half of sales. Commercial aerospace recovery, GTF fleet management and airline aftermarket demand move the other ~48%. The demand-cycle guide contrasts RTX's 52/48 split with LMT's near-total government dependency.

Segment ROS dispersion (Collins 16.3% vs Pratt 7.9%) reflects mix between aftermarket-rich avionics and engine OEM cycles under warranty pressure. Raytheon at 11.5% sits between them on the defence side.

Valuation Framework

RTX's mix of defence backlog and commercial aftermarket revenue means a single earnings or cash yardstick applied straight across the peer set will not capture it. The FCF yield guide uses RTX as the dual defence-and-commercial comparator. The commercial half compounds on airline traffic and engine shop visits, a different driver from the defence half's budget cycle, so a like-for-like comparison with single-stream primes needs the split accounted for first.

Valuation here is a sum-of-the-streams problem: defence backlog conversion and book-to-bill momentum on one side, commercial aftermarket and engine shop visits on the other.

What to Watch in the Financials

Book-to-bill and backlog split. 1.56x filed ratio with $268B total backlog. Track whether defence backlog ($107B) grows faster than commercial ($161B) as NATO rearmament accelerates, or whether commercial awards lift the blended book-to-bill ratio instead.

Pratt & Whitney margin and GTF exposure. 7.9% segment ROS is the portfolio floor. Engine warranty and fleet grounding costs on the GTF platform are the main swing factor in the commercial half, even though programme-level revenue share is not filed.

Defence vs commercial revenue mix. 52% / 48% in FY2025. A shift toward defence above 55% would tie results more closely to the budget cycle. A commercial rebound needs cash conversion to hold before it shows up in free cash flow.

FCF conversion. 118% in FY2025, strong but below LMT (138%) and LHX (170%). Watch pension timing, which the industry calls FAS-CAS, and working-capital timing on large Raytheon awards.

Key Risks

Commercial aerospace cyclicality. Nearly half of revenue and the majority of backlog sit in commercial markets. An airline downturn or prolonged GTF disruption hits RTX and spares pure defence primes.

Free cash flow versus market cap. RTX carries the largest market capitalisation among the six primes. A capex step-up, a slower GTF aftermarket ramp, or a working-capital swing on large Raytheon awards would be more visible against that size than at a smaller-cap peer.

Pratt margin pressure. 7.9% ROS on an engine OEM exposed to fleet technical issues and OEM-to-aftermarket transition timing.

No filed programme concentration. Without a single-programme revenue percentage, binary risk is harder to quantify than at LMT (F-35 27%). Patriot and classified programmes matter but do not appear as consolidated sales percentages in filings.