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RTX Corporation Q2 2025 Earnings Preview: Defense Backlog and Aerospace Recovery Drive Growth

by monexa-ai

RTX Corporation's Q2 2025 earnings preview highlights strong defense backlog and commercial aerospace recovery, supported by key missile contracts and strategic divestitures.

Modern jet engine being inspected by engineers in a high-tech aerospace facility with a subtle purple background

Modern jet engine being inspected by engineers in a high-tech aerospace facility with a subtle purple background

Introduction#

RTX Corporation's upcoming Q2 2025 earnings release is poised to reflect the company's robust positioning amid a dual-tailwind environment of escalating defense demand and a recovering commercial aerospace sector. With a market capitalization of approximately $192.64 billion and a stock price steady near $144.20, RTX is navigating a complex landscape driven by geopolitical tensions and strategic portfolio realignments.

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Q2 2025 Earnings Outlook and Market Expectations#

Investors anticipate RTX's Q2 2025 revenue growth of around +4.46% year-over-year, with earnings per share (EPS) expected to increase modestly to about $1.43, a +1.7% rise compared to Q2 2024. This forecast reflects the company's strong defense backlog and improving aerospace operations, alongside ongoing cost controls and operational efficiencies.

RTX has consistently outperformed earnings estimates recently, with the past four quarterly earnings surprises ranging from +4.44% to +11.59%, underscoring effective execution in a competitive environment Seeking Alpha.

Metric Q2 2025 Estimate Q2 2024 Actual Change
Revenue Growth +4.46% N/A +4.46%
EPS $1.43 $1.41 +1.7%

Defense Backlog: Sustained Growth Amid Geopolitical Tensions#

RTX's defense backlog reached approximately $93 billion at the end of 2024, part of an overall order backlog of $218 billion, reflecting sustained demand for missile defense and advanced military systems. The backlog growth is primarily fueled by geopolitical tensions prompting increased military spending globally, especially in the U.S., Europe, and Asia.

Key missile systems contributing to this backlog include the SM-6 and NASAMS, both critical to allied missile defense architectures. A notable $333 million contract for SM-6 missiles awarded in January 2025 and Norway’s contract to replenish NASAMS units donated to Ukraine exemplify RTX’s strategic defense foothold Lockheed Martin News, Northrop Grumman News.

RTX’s diversified portfolio, including Patriot missile systems and hypersonic defense solutions, positions it advantageously against peers like Lockheed Martin and Northrop Grumman. The global missile defense market's projected CAGR of ~5% through 2030 supports this sustained demand Business Insider.

Commercial Aerospace Recovery: Pratt & Whitney's GTF Engine Momentum#

Pratt & Whitney (P&W), a key RTX segment, benefits from a recovering commercial aerospace market. The company's geared turbofan (GTF) engine orders surged to nearly 1,100 units in H1 2025, contributing to a total installed base exceeding 12,000 engines worldwide. Major airline customers such as Wizz Air and All Nippon Airways drive this demand.

The aftermarket segment also shows robust growth, with Q1 2025 sales up +21%, fueled by increased flight hours and fleet expansions. P&W is expanding its maintenance, repair, and overhaul (MRO) capacity by approximately 30% in 2024 to meet this demand Aviation Week, Flight Global.

Despite challenges including grounding incidents affecting around 40 Wizz Air aircraft and $1.1 billion compensation costs in 2024, P&W's certification of the GTF Advantage engine promises improved fuel efficiency and reliability, positioning it for sustainable growth.

Segment Performance: Collins Aerospace and Raytheon#

RTX’s Collins Aerospace segment reported a +6% year-over-year sales increase to $7.54 billion in Q4 2024, driven by defense and commercial aftermarket strength. Margin improvements reflect operational efficiencies and favorable market conditions.

Raytheon remains a significant growth engine, supported by high-margin missile systems and radar solutions amid increased global military spending. Both segments contribute to RTX's projected operating margin expansion and revenue growth.

Strategic Portfolio Realignment: Divestiture of Simmonds Precision Products#

RTX announced the sale of its Simmonds Precision Products business to TransDigm for approximately $765 million. This divestiture aligns with RTX’s focus on higher-margin core areas such as missile defense, jet engines, and aerospace systems.

The transaction enhances RTX's financial flexibility and allows reallocation of capital toward innovation and growth initiatives in strategic sectors MarketWatch.

Financial Performance Overview#

RTX's fiscal 2024 results show strong revenue growth of +17.15% to $80.74 billion, with net income rising +49.42% to $4.77 billion. Operating income improved to $6.54 billion, yielding an operating margin of 8.1%, up from 5.17% in 2023. These improvements underscore effective cost management and operational leverage.

Financial Metric 2024 Actual 2023 Actual YoY Change
Revenue $80.74B $68.92B +17.15%
Net Income $4.77B $3.19B +49.42%
Operating Income $6.54B $3.56B +83.15%
Operating Margin 8.1% 5.17% +2.93pp
Research & Development $2.93B $2.81B +4.27%

RTX's free cash flow remained robust at $4.53 billion in 2024, despite a slight decline from the previous year (-3.88%). Capital expenditures increased moderately to $2.63 billion, reflecting investments in property, plant, and equipment aligned with growth initiatives.

Balance Sheet and Financial Health#

As of December 31, 2024, RTX held total assets of $162.86 billion, with goodwill and intangible assets comprising $86.23 billion. Total liabilities stood at $100.9 billion, with long-term debt at $38.73 billion, representing a net debt of approximately $37.31 billion.

The current ratio of 1.01x indicates adequate short-term liquidity, while a debt-to-equity ratio of 0.67x reflects a moderate leverage profile. Net debt to EBITDA stands at 2.83x, signaling manageable debt levels relative to earnings Monexa AI.

Balance Sheet Metric 2024 Value 2023 Value Change
Total Assets $162.86B $161.87B +0.61%
Total Liabilities $100.9B $100.42B +0.48%
Total Stockholders Equity $60.16B $59.8B +0.61%
Long-Term Debt $38.73B $43.77B -11.52%

Valuation and Analyst Estimates#

RTX’s current price-to-earnings (PE) ratio stands at approximately 42.16, reflecting market expectations of growth. Forward PE estimates show a declining trend from 23.93x in 2025 to 16.9x by 2029, suggesting anticipated earnings growth and margin expansion.

Revenue forecasts project growth from $84.26 billion in 2025 to over $100 billion by 2029, with EPS expected to increase from approximately $6.0 to $8.48 over the same period.

Year Revenue Estimate EPS Estimate Forward PE Estimate
2025 $84.26B $5.99 23.93x
2026 $89.32B $6.73 21.32x
2027 $94.57B $7.56 18.92x
2028 $99.26B $8.26 17.36x
2029 $100.21B $8.48 16.90x

What Drives RTX Corporation's Dual-Tailwind Growth Strategy?#

RTX’s growth is propelled by two key forces: a substantial defense backlog fueled by global military modernization and a rejuvenating commercial aerospace sector benefiting Pratt & Whitney’s GTF engine demand. These forces enable RTX to balance near-term revenue growth with long-term technological innovation investments.

The defense segment’s $93 billion backlog, driven by contracts for missile systems such as SM-6 and NASAMS, ensures a stable revenue pipeline supported by geopolitical defense spending trends. Meanwhile, Pratt & Whitney's expanding GTF engine orders and aftermarket services underscore aerospace recovery momentum.

Key Takeaways for Investors#

  • RTX's strong defense backlog and commercial aerospace recovery underpin revenue growth and margin expansion.
  • Strategic divestiture of non-core Simmonds Precision Products enhances focus on high-margin segments.
  • Robust financial performance in 2024 with significant operating income growth and improved margins.
  • Balanced financial health with manageable leverage and solid liquidity.
  • Forward-looking estimates indicate sustained revenue and EPS growth with improving valuation multiples.

What This Means For Investors#

RTX Corporation’s positioning in defense and aerospace markets, underscored by a substantial defense backlog and a recovering commercial aerospace business, provides a resilient foundation for growth. The company’s strategic focus on portfolio optimization and technological innovation aligns with market demand trends, supporting sustained financial performance.

Investors should monitor the upcoming Q2 2025 earnings release closely, as it will provide critical insights into how RTX’s dual-tailwind strategy translates into operational results and profitability. The company’s ability to manage challenges, such as Pratt & Whitney’s engine reliability issues, alongside capital allocation discipline, will be key to maintaining competitive advantage.


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