RTX Corporation
Industrials · Aerospace & Defense
Diversified A&D prime with three structural tailwinds compounding into the back half of the decade: (1) missile-defense restocking post-Ukraine/Israel/Red Sea draws down Patriot, SM-3, SM-6, AMRAAM, Stinger inventories - DoD multi-year procurement now contractually locking demand into FY29; (2) GTF powder-metal recall is a known $6-7B charge being worked through with AOG fleet down 350+ aircraft, creating a multi-year aftermarket shop-visit annuity as engines cycle back through P&W MRO; (3) Collins ramps on $BA 737 MAX and 787 rate increases plus $AIRBUS A320neo/A350 deliveries.
- Raytheon defense backlog $93B+, book-to-bill above 1.0x for 8 straight quarters
- GTF aftermarket - every recalled engine returns as a high-margin shop visit, multi-year tail
- Patriot/NASAMS demand structural (Ukraine + Saudi + Poland + Germany + Romania orders stacked)
- Collins margin expansion as 737 MAX + A320neo rates normalize through 2027
- $7B+ annual buyback authorization + 2.3% dividend
- GTF cash drag - $1.3B/yr customer compensation payments through 2027
- Defense margins capped at ~12% by FAR cost-plus structure (no operating leverage on volume)
- Pension headwind if rates fall (every 100bps = ~$400M EPS hit)
- China A&D decoupling cuts Collins aftermarket TAM by ~$3B over cycle
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