Overview
RTX Corp
RTX · NYSEQ3 2026Aerospace & Defense · Engines, Avionics and Missile Systems
Since the Report + 2.0%
Revenue grew 11.1% year over year, EPS beat the estimate by 27.0%; the stock rose 0.6% in its first reaction.
- SalesQ3
- $24.97B
- ▲ 11% Year Over Year · Beat by 3.7%
- EPSAdjusted
- $2.26
- Estimate $1.78 · Beat by 27%
Verdict
BUYRTX reported third-quarter sales of $24.97 billion and adjusted EPS of $2.26; both beat estimates, and backlog hit a record $340 billion. The stock rose as high as $197 intraday, but $0.25 of EPS from a one-time tariff cost recovery capped the gain, and it closed up 0.6%. The next test is whether margins keep expanding without that recovery.
Close on Report DayOct 20
$193.34▲ 0.6%Report-Day Move
- Market Cap(Today)
- ≈ $266 B
- 1Y Return(At Report)
- + 19%
- P/E(At Today's Price · $7.48 · Trailing 12M)
- 26.4
- PEG(Company Guidance 2026)
- 1.18
- Net Margin(Trailing 12M)
- 8.8%
Earnings Summary
In 30 Seconds- RTX beat estimates with $24.97 billion in sales and $2.26 in adjusted EPS, by 3.7% and 27% respectively.
- Full-year EPS guidance rose to $7.65-7.75, but $0.25 of the quarter's EPS came from a one-time tariff recovery.
- The stock reached $197 intraday, gave back most of its gains and closed up 0.6%.
The Numbers
Backlog
$340B
Record · ▲ 17.6% Quarter Over Quarter
Free Cash Flow
$2.12B
▼ 47% YoY · Incl. $0.3B Recovery
Collins Adjusted Margin
21.3%
▲ 5.6 Points · ~3 Points From Recovery
Stock Reaction
▲ 0.6%
Close to Close · $193.34
Quarterly Revenue ($ Billion)
22.48
Q3 25 · $22.5 B
24.24
Q4 25 · $24.2 B · QoQ + 7.8%
22.08
Q1 26 · $22.1 B · QoQ − 8.9%
24.71
Q2 26 · $24.7 B · QoQ + 11.9%
24.97
Q3 26 · $25.0 B · QoQ + 1.0% · YoY + 11.1%
25.25–25.75
Q4 26E · 25.25–25.75 · QoQ + 2.1% · YoY + 5.2%
- Q3 25
- Q4 25
- Q1 26
- Q2 26
- Q3 26
- Q4 26E
Q4 2026 Company Guidance
- Full-Year Adjusted EPS7.65 – 7.75 $7.65 $7.75 $7.65 – 7.75 $
Midpoint 7.70 · Market Expectation 7.25 · Prior 7.10–7.256.2% Above Estimate ▲
- Full-Year Sales97.0 – 97.5 billion97.0 billion97.5 billion97.0 – 97.5 billion
Midpoint 97.25 · Market Expectation 96.3 · Prior 95–96In Line ✓
- Full-Year Free Cash Flow9.0 – 9.2 billion9.0 billion9.2 billion
Prior 8.50–8.75 · Mostly From RecoveryRaised 5.5% ▲
- Full-Year Organic Growth10% – 11%10%11%
Prior 8–9%Raised 2.0 Points ▲
How to Read the Chart
The blue band is the company's low-high range; its length shows how much room the company left itself. The black triangle and the line beneath it mark where the market expected, and the notch in the band is the range's midpoint. The triangle appears only where a market expectation is known. When the company gave a single number rather than a range and no market expectation is known, that row gets no band at all: there is no length to measure and no position to compare. Axis is ±6.7% around the midpoint.
Segment and KPI Data
Revenue by Segment
- Pratt & Whitney$9.23 BShare 36.0%▲ 9.6% YoY
- Collins Aerospace$8.38 BShare 32.7%▲ 10.0% YoY
- Raytheon$8.03 BShare 31.3%▲ 14.0% YoY
Key Metrics
Free Cash Flow
$2.12 B
▼ 47.4% YoYPress Release
Operating Cash Flow
$2.87 B
▼ 38.2% YoYPress Release
Backlog
$340 B
Press Release
Defense Backlog
$164 B
Press Release
Collins Adjusted Operating Margin
21.3%
Press Release
Pratt Adjusted Operating Margin
10.5%
Press Release
Raytheon Operating Margin
14.1%
Press Release
Shares are computed over the segment total: $25.6 B. The segment total differs from consolidated revenue ($25.0 B); the company's eliminations and other lines are not in this table. Source: Press Release.
Metrics come only from the company's own filings; each one names the document it was taken from.
“Our strong execution and operational focus in the third quarter enabled RTX to deliver double-digit organic sales growth across commercial aerospace and defense. Demand for our products remains robust with over $81 billion of new commercial and defense awards, resulting in a record backlog of $340 billion. Given our performance year to date, we are again raising our full year outlook for adjusted sales, adjusted EPS, and free cash flow.”
- Munitions Output Accelerating
- GTF MRO Capacity Rising
- Tariff Recovery Is One-time
Summary and Review
Summary
RTX's third-quarter sales rose 11% year over year to $24.97 billion. The market expected $24.08 billion, so sales beat by 3.7%. Adjusted EPS was $2.26, topping the $1.78 estimate by 27%. The midpoint of full-year EPS guidance is $7.70, 6.2% above the market's $7.25 expectation. All three gates are open: sales, earnings and guidance all came in above estimates. The widest gate is earnings, with a 27% beat.
The stock rose in premarket trading and reached $197 intraday. It slipped to near $191 by midday, then closed up 0.6% at $193.34. The market read this report not as a demand story but as a quality question. Of the quarter's EPS, $0.25 came from recovering tariff costs paid under IEEPA. Free cash flow also fell 47% year over year to $2.12 billion. Giving back most of the intraday gain suggests much of the good news was already priced in.
The score is 81 with a buy verdict; it rates the quarter, not the stock. Even excluding the tariff recovery, EPS was $2.01, 13% above the estimate. Backlog grew 17.6% in a single quarter to $340 billion. Defense backlog rose from $119 billion to $164 billion. The caveats are weak cash conversion, one-time items and new munitions contracts whose pricing is not yet final. These caveats keep the score at the low end of its band.
Full Review
All three segments grew by double digits.
Collins Aerospace sales rose 10% to $8.38 billion. Commercial original equipment sales in the segment grew 23%. Pratt & Whitney sales also rose 10%, to $9.23 billion. Pratt's commercial aftermarket sales grew 21%. Most of that growth came from GTF engines. Raytheon sales rose 14% to $8.03 billion. Patriot, Standard Missile and Tomahawk volumes drove the growth. The only weak line was Pratt's commercial original equipment business. It fell 5% because of large commercial engine mix. Organic growth of 12% was above headline growth. The gap reflects businesses divested over the past year. Defense sales at Collins also rose 7%. Aftermarket growth came even as global passenger traffic dipped slightly year over year. That suggests maintenance demand is driven by a growing, aging fleet more than by flight counts.
Part of the margin expansion is one-time.
Collins' adjusted operating margin rose from 15.7% to 21.3%, an increase of 5.6 points. About 3 points of that came from $250 million of tariff cost recovery booked in the segment. Pratt's adjusted margin rose from 8.9% to 10.5%. It also includes $160 million of recovery. Without it, Pratt's margin would have been flat. Pratt also took a $363 million charge for a customer bankruptcy. That item is excluded from adjusted results. Raytheon's margin rose from 12.2% to 14.1%. That includes about $85 million from an international contract modification and an offset obligation adjustment. CFO Neil Mitchill said on the call that margins will expand next year even excluding the recovery. Margins rose even without the recovery, but by less than the headline suggests. The fourth quarter is where that claim gets tested.
Cash flow lagged earnings.
Operating cash flow fell 38% year over year to $2.87 billion. Capital expenditures were $0.7 billion. Free cash flow came in at $2.12 billion. A year earlier it was $4.03 billion, so the decline was 47%. This quarter's cash also included about $0.3 billion of tariff recovery. Even so, the company raised full-year free cash flow guidance from $8.50-8.75 billion to $9.0-9.2 billion. The midpoint rose 5.5%. Mitchill said the increase was driven primarily by the recovery. Adjusted net income was $3.09 billion. Free cash flow equaled only 69% of that. This gap between earnings and cash is the quarter's weakest link. The growing backlog is also raising working capital needs. Readers who want the details can see the cash flow guide.
Backlog gives long-term visibility.
Backlog hit a record $340 billion. Of that, $176 billion is commercial and $164 billion is defense. Defense backlog rose 38% from $119 billion in the second quarter. The increase came from multi-year production contracts for Tomahawk and AMRAAM. These contracts are still undefinitized, however. Final pricing and margins depend on negotiation. CEO Chris Calio said on the call that the priority is expanding the supply chain and production capacity. Revenue will be recognized as costs are incurred. So the contracts' contribution to sales will be spread over several years. The company booked more than $81 billion of new awards in the quarter. Commercial backlog also rose from $170 billion to $176 billion. That 3.5% increase on the commercial side was more modest.
Next quarter, watch the Collins margin.
This quarter's numbers are strong, but some come from items that will not repeat. The tariff recovery's contribution will largely disappear in coming quarters. That raises the comparison base. Next quarter, watch one line: Collins' adjusted operating margin. Excluding the recovery, this quarter's margin was about 18.3%. In the fourth quarter of last year, Collins' margin was 18.1%. If the fourth-quarter margin holds above 18%, the expansion is operational. If it falls below 16%, this quarter's jump came mostly from the recovery. The second measure is full-year free cash flow. If the $9.0 billion low end holds, the cash weakness stays a timing issue. The company will give its 2027 guidance with its January report. The slight midday decline reversed into the close, and the stock finished the day up 0.6%.
Looking Ahead
Strengths and Risks
5 Strengths · 5 RisksStrengths
5- Sales beat estimates by 3.7%, and adjusted EPS beat by 27%.
- Backlog rose 17.6% in one quarter to a record $340 billion.
- The midpoint of full-year EPS guidance is $7.70, 6.2% above market expectations.
- Even excluding the tariff recovery, EPS beat the estimate by 13%.
- Multi-year production contracts for Tomahawk and AMRAAM lifted defense backlog to $164 billion.
Risks
5- $0.25 of the quarter's EPS came from a one-time tariff cost recovery that will not repeat.
- Free cash flow fell 47% year over year to $2.12 billion.
- Pratt & Whitney took a $363 million charge related to a customer bankruptcy.
- The new munitions contracts are not yet definitized, so final pricing and margins are uncertain.
- High fuel prices could weaken airline flight plans and aftermarket demand.
What to Watch
5- Fourth-quarter results and 2027 guidance will be released in January 2027.
- The Hot Section+ upgrade package is expected to enter GTF shop visits in early 2027.
- Definitization of pricing and terms for the Tomahawk and AMRAAM contracts will be watched.
- The U.S. government is operating under a continuing resolution; approval of the 2027 defense budget is key for munitions programs.
- Jill Albertelli is taking over as Pratt & Whitney president; the transition's effect on the GTF program will be watched.
Upcoming Earnings
To Understand This