RTX Stock: It Beat Earnings and RAISED Guidance AGAIN — So Why We Say HOLD

RTX Corporation (RTX) Q2 2026 — RTX Corporation (RTX), the aerospace-and-defense prime (Collins Aerospace, Pratt & Whitney, Raytheon), reported a blowout Q2 2026: adjusted EPS of $1.89 crushed the ~$1.66 estimate (+21% YoY) on sales of $24.7B (+14%, +16% organic), operating margin expanded across all three segments, and free cash flow swung to +$2.9B (from -$72M a year ago). Management RAISED full-year 2026 guidance across the board — adjusted sales to $95-96B, organic growth to 8-9%, adjusted EPS to $7.10-$7.25, and FCF to $8.5-$8.75B — on a record $289B backlog (+22%; $170B commercial / $119B defense). Segments: Collins $8.2B (+8%, 16.7% margin), Pratt $8.9B (+16%, 8.3% margin), Raytheon $8.3B (+18%, 12.6% margin). Yet the stock (~$195, +0.6%) faded a +4% pre-market pop — and fell ~4% on the last beat-and-raise. At ~27x forward earnings and ~30x FCF, even our compounder-leaning owner-earnings DCF lands near $190 — right on top of the price. Our call: HOLD. RTX is one of the world's two dominant aerospace-and-defense primes — a ~$262B company born from the 2020 Raytheon–United Technologies merger, balanced almost perfectly across three businesses: Collins Aerospace (avionics & systems), Pratt & Whitney (jet engines — the GTF and the F135 that powers the F-35), and Raytheon (Patriot, AMRAAM, Standard Missile). Q2 2026 was a genuine blowout: adjusted EPS of $1.89 beat the ~$1.66 estimate (+21% YoY), sales rose 14% to $24.7B (+16% organic — nearly $2B above expectations), margins expanded across all three segments, and free cash flow swung to +$2.9B from a small outflow a year ago. For the second time this year, management RAISED full-year guidance across the board — adjusted sales to $95-96B, organic growth to 8-9%, adjusted EPS to $7.10-$7.25, and FCF to $8.5-$8.75B — backed by a record $289B backlog (+22%), ~3x annual sales and split $170B commercial / $119B defense. The drivers: commercial aftermarket (Collins +10%, Pratt +25%) as airlines fly older jets hard, a defense super-cycle (Raytheon +18% on Patriot/AMRAAM/SM), and a GTF aftermarket wave just starting (800+ orders YTD, 8,000+ engine backlog). So the debate isn't quality — it's price. The stock trades near $195, ~27x forward earnings and ~30x FCF, and it faded a +4% pre-market pop to roughly flat (it fell ~4% on the Q1 beat-and-raise). Even giving RTX the optimistic compounder path (10%->4% FCF growth) AND a fair 9% discount rate, our owner-earnings DCF lands near $190 — right on top of the price; the steady path is worth less ($150 at 9%). A wonderful, all-weather franchise with no margin of safety. Our call: HOLD, 3/5. We're not sellers of quality this good and this well-positioned, but at ~27x we wouldn't chase it — and we're a touch more cautious than the Street's bullish ~$220 average target (Buy, 18 of 26 analysts, though most targets predate this morning's raise). Own it for the quality, add on real weakness toward the mid-$160s, and watch Pratt's margin and the GTF aftermarket. Not financial advice. THE CALL: HOLD (3/5, FIRING ON ALL CYLINDERS, PRICED AT FAIR VALUE — A BLOWOUT BEAT-AND-RAISE WITH NO MARGIN OF SAFETY) — base-case value ~$190 vs ~$195 today. What to watch: hard evidence the GTF aftermarket is inflecting and Pratt's segment margin is climbing toward the teens — which would unlock the compounder path (fair value north of $215) and prompt an upgrade; the risks to respect are a defense-budget air-pocket, escalating tariffs (~$500M IEEPA exposure), or another Pratt powder-metal reserve increase, any of which could re-rate a full ~27x multiple Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.