Time To Buy RTX Stock At $125?

April 11th, 2025 by Trefis Team

Despite ongoing selling pressure in the broader markets due to the trade war between the U.S. and China, RTX (NYSE:RTX) has shown significant strength, rising by 10% this year. This outperformance can be partly attributed to the defense industry’s unique characteristics. Often driven by geopolitical factors and specific government contracts, the sector tends to be less directly impacted by broad-based tariffs compared to commercial industries. Furthermore, Bloomberg reported that President Trump is expected to approve a defense budget of around $1 trillion for 2026, which would be the largest in history. Despite this recent appreciation, we believe RTX stock, currently trading around $125, presents a compelling buying opportunity due to its reasonable valuation.

Our positive outlook is based on a comprehensive analysis that compares RTX’s current valuation against its recent operating performance and overall financial health, both present and historical. Our assessment of RTX across key parameters—including Growth, Profitability, Financial Stability, and Downturn Resilience—indicates that the company exhibits a moderate operating performance and financial condition, as further detailed in the following sections.

Image by Robert Waghorn from Pixabay

 

How Does RTX’s Valuation Look vs. The S&P 500?

Going by what you pay per dollar of sales or profit, RTX stock doesn’t look expensive compared to the broader market.

  • RTX has a price-to-sales (P/S) ratio of 2.1 vs. a figure of 3.2 for the S&P 500
  • Additionally, the company’s price-to-operating income (P/EBIT) ratio is 25.9 compared to 24.3 for S&P 500
  • And, it has a price-to-earnings (P/E) ratio of 35.5 vs. the benchmark’s 24.3

How Have RTX’s Revenues Grown Over Recent Years?

RTX’s Revenues have seen notable growth over recent years.

  • RTX has seen its top line grow at an average rate of 8.0% over the last 3 years (vs. increase of 6.3% for S&P 500)
  • Its revenues have grown 17.1% from $69 Bil to $81 Bil in the last 12 months (vs. growth of 5.2% for S&P 500)
  • Also, its quarterly revenues grew 8.5% to $22 Bil in the most recent quarter from $20 Bil a year ago (vs. 5.0% improvement for S&P 500)

How Profitable Is RTX?

RTX’s profit margins are around the median level for companies in the Trefis coverage universe.

Does RTX Look Financially Stable?

RTX’s balance sheet looks weak.

  • RTX’s Debt figure was $43 Bil at the end of the most recent quarter, while its market capitalization is $170 Bil (as of 4/10/2025). This implies a moderate Debt-to-Equity Ratio of 25.3% (vs. 19.0% for S&P 500). [Note: A lower Debt-to-Equity Ratio is desirable]
  • Cash (including cash equivalents) makes up $5.6 Bil of the $163 Bil in Total Assets for RTX.  This yields a poor Cash-to-Assets Ratio of 3.4% (vs. 14.8% for S&P 500)

How Resilient Is RTX Stock During A Downturn?

RTX stock has seen an impact that was slightly worse than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on RTX stock? Our dashboard How Low Can RTX Stock Go In A Market Crash? has a detailed analysis of how the stock performed during and after previous market crashes.

Inflation Shock (2022)

  • RTX stock fell 33.7% from a high of $104.66 on 18 April 2023 to $69.38 on 5 October 2023, vs. a peak-to-trough decline of 25.4% for the S&P 500
  • The stock fully recovered to its pre-Crisis peak by 9 May 2024
  • Since then, the stock has increased to a high of $135.66 on 25 March 2025 and currently trades at around $125

Covid Pandemic (2020)

  • RTX stock fell 52.2% from a high of $91.87 on 7 February 2020 to $43.91 on 23 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
  • The stock fully recovered to its pre-Crisis peak by 14 January 2022

Global Financial Crisis (2008)

  • RTX stock fell 54.2% from a high of $48.08 on 1 October 2007 to $22.00 on 9 March 2009, vs. a peak-to-trough decline of 56.8% for the S&P 500
  • The stock fully recovered to its pre-Crisis peak by 27 January 2011

Putting All The Pieces Together: What It Means For RTX Stock

In summary, RTX’s performance across the parameters detailed above are as follows:

  • Growth: Very Strong
  • Profitability: Neutral
  • Financial Stability: Weak
  • Downturn Resilience: Neutral
  • Overall: Neutral

While our analysis indicates a moderate overall performance for RTX across the key parameters discussed, this is already reflected in its moderate valuation. Looking ahead, the anticipated increase in defense spending would likely be a significant tailwind for RTX, supporting its stock growth.

Of course, potential risks such as supply chain disruptions stemming from the ongoing tariff war cannot be entirely dismissed. However, considering the favorable outlook and the current valuation, we maintain our view that RTX is a good buy at its current price of approximately $125.

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