RTX

Aerospace and defense company RTX (RTX -0.10%) didn’t really have a banner day on the market Thursday, but in a trading session when the S&P 500 index fell by 0.6%, the stock’s flat performance made it a winner. Investors were reacting to good news from one of RTX’s three core business divisions.

Up in the air

That division is aircraft engine specialist Pratt & Whitney, which this morning reported it had earned an important certification abroad.

Image source: Getty Images.

Specifically, Pratt Whitney’s GTF Advantage engine got the nod from the European Union Aviation Safety Agency (EASA). This follows similar certification from EASA’s American equivalent, the Federal Aviation Agency (FAA), and the company said it clears a path for the product to enter service next year.

The GTF Advantage is a next-generation engine for airliners that, according to its maker, delivers more thrust and boasts higher fuel efficiency than competing products currently on the market.

Big promises

In its press release divulging the happy news, Pratt & Whitney quoted its president of commercial engines, Rick Deurloo, as saying that the company’s new engine “will be a game-changer for operators.”

Despite the confidence, however, Pratt & Whitney did not provide any estimates as to how sales of the GTF Advantage will impact its fundamentals, or those of its parent RTX.

On Tuesday, Eastover Investment Advisors disclosed that it sold 6,691 shares of RTX Corporation (RTX 0.41%) in the third quarter.

What happened

Eastover Investment Advisors sold 6,691 shares of RTX Corporation(RTX 0.41%) worth an estimated $1 million in the third quarter, according to a Form 13-F filed with the Securities and Exchange Commission on Tuesday. The fund reported holding 54,659 shares worth $9.1 million as of September 30.

What else to know

Eastover’s RTX position represents about 4% of the firm’s total assets.

Top holdings after the filing:

• NASDAQ:AVGO: $15.2 million (6.6% of AUM)
• NASDAQ:AAPL: $12.9 million (5.6% of AUM)
• NASDAQ:NVDA: $12.9 million (5.6% of AUM)
• NASDAQ:GOOGL: $11.4 million (5.0% of AUM)
• NASDAQ:MSFT: $11.4 million (4.96% of AUM)

As of Monday, shares of RTX were priced at $169.27, up 35% over the past year and outperforming the S&P 500 by about 17 percentage points.

Company Overview

Company Snapshot

• RTX provides aerospace and defense systems, including aircraft engines, avionics, cabin interiors, threat detection, and aftermarket services through its Collins Aerospace, Pratt & Whitney, and Raytheon segments.
• Generates revenue primarily from the sale of products and long-term service agreements to commercial airlines, military, and government customers, leveraging a mix of original equipment manufacturing and aftermarket support.
• Serves commercial airlines, defense departments, and government agencies globally, with a significant presence in both U.S. and international markets.

RTX Corporation is a leading global aerospace and defense company with a diversified portfolio spanning commercial aviation, military systems, and advanced defense technologies.

Foolish take

Charlotte-based Eastover Investment Advisors’ sale of 6,691 shares of RTX Corporation (formerly Raytheon Technologies)—worth about $1 million—could reflect profit-taking after a year of extraordinary gains. The aerospace and defense contractor’s stock has soared 46% year-to-date, handily outperforming the S&P 500’s 14% rise, as demand for both commercial aviation and defense systems surged.

RTX reported 9% year-over-year sales growth in the second quarter, with strength across all three business segments—Collins Aerospace, Pratt & Whitney, and Raytheon—and particularly notable 16% commercial aftermarket growth. Adjusted earnings per share rose 11% to $1.56, and CEO Chris Calio highlighted a record backlog of $236 billion, calling the results proof that “we’re well positioned to drive long-term profitable growth.”

Investors will get a closer look at how RTX is executing when it reports third-quarter earnings on October 21. And with the recovery in commercial air travel and robust global defense spending, RTX offers dual exposure to cyclical and structural growth trends. For long-term investors, occasional pullbacks—like Eastover’s sale—may still represent opportunities, not exits.

Glossary

13F reportable assets: Assets that institutional investment managers must disclose quarterly to the SEC, showing their holdings.
Assets Under Management (AUM): The total market value of investments managed by a fund or firm on behalf of clients.
Fully liquidated: Sold all shares or holdings in a particular investment, resulting in a zero position.
Form 13-F: A quarterly SEC filing by institutional investment managers to disclose their equity holdings.
Aftermarket services: Support, maintenance, and parts provided after the initial sale of a product, often generating recurring revenue.
Original equipment manufacturing: Producing components or products that are sold to other companies for use in their end products.
Dividend yield: A financial ratio showing how much a company pays in dividends each year relative to its share price.
TTM: The 12-month period ending with the most recent quarterly report.

RTX (RTX 0.02%), best known for its defense business, also happens to be what’s known as a defensive stock. The recession-resistant nature of the company’s defense unit provides stability to earnings and dividends, making the stock defensive in nature.

But stability is not just another way of saying “low growth.” Over the past year, this stock has surged by 38% largely on enthusiasm for the strong growth it’s generating, particularly from the company’s commercial aerospace segment.

Even better, further growth could be just around the corner. Unlike last quarter, where commercial business was the growth driver, future growth could be led by RTX’s core defense business.

Image source: Getty Images.

RTX and its “magnificent” year-to-date gains

With its surge thus far in 2025, RTX has not only handily beaten major indices like the S&P 500, but it has also outperformed larger stocks that the markets have come to associate with strong returns, like the “Magnificent Seven” tech giants.

Interestingly enough, earlier this year, RTX’s shares delivered sideways price performance. Concerns about rising tariffs were top of mind among investors. This factor outweighed positives like RTX’s solid Q1 2025 results.

However, in June, following a sudden spike in Mideast tensions, share prices in RTX and its defense industry peers began to spike as well. Even as these tensions de-escalated, RTX’s rally persisted. Shares continued to rise ahead of and after the company’s Q2 2025 earnings release, hitting new all-time highs as a result.

Source: RTX earnings reports.

It’s no wonder. As seen in the chart above, during the quarter ending June 30, 2025, the company reported solid sales and earnings growth. This growth was driven largely by strong commercial sales growth from RTX’s Pratt & Whitney division.

There are still many chapters left in this growth story

For RTX last quarter, sales and earnings were not only up on a year-over-year basis. They were also up sequentially, or quarter over quarter, as well. During Q1 2025, RTX’s sales and adjusted earnings per share grew by only 5% and 10%, respectively.

Before you jump to the conclusion that last quarter’s growth was a “one and done” event, take a look at another key performance indicator: contract backlog. As of June 30, 2025, the company’s total backlog stood at $236 billion, up 15% compared to a year ago. Commercial backlog totaled $144 billion, while defense backlog totaled $92 billion.

A year ago, these figures stood at $129 billion for commercial and $77 billion for defense.Hence, with the defense backlog, up 20% over the past year, growing faster than the commercial backlog, up 11.6% over the past year, RTX’s defense segment could experience a greater growth resurgence in the coming quarters.

That’s not all. Strong growth in defense could make up for any turbulence among RTX’s commercial aviation businesses, if recent macro uncertainty gives way to an economic slowdown. Instead of stalling out within a quarter or two, this “growth story” may have many more chapters to go.

What this means for the stock moving forward

Currently, RTX trades for around 24.6 times forward earnings. Compared to peers like Lockheed Martin (LMT), which trades for around 16.8 times forward earnings, this valuation may sound steep.

However, if the growth story persists, I believe this valuation is sustainable. Wall Street loves a growth story, and this one continues to strengthen. That’s clear from RTX’s recent spate of contract wins, including a $1.7 billion air and missile defense radar contract with the U.S. Army.

Only time will tell whether shares experience further multiple expansion, but the stock could continue to rise in tandem with earnings growth. Coupled with its quarterly cash dividend, which was recently increased by 8% and provides shares with a 1.67% forward yield, RTX could deliver steady gains over the next year. The prospect of this appeals to me, given growing concerns about another stock market correction on the horizon.