RTX surges on strong Q4 earnings, record backlog
Defense contractor beats expectations with $24.2B revenue, upbeat 2026 outlook driven by robust demand
RTX Corporation delivered better-than-expected fourth-quarter results, driven by strong demand across its defense and commercial aerospace businesses, as the defense contractor raised its outlook for 2026 and reported a record backlog of orders.
The aerospace and defense giant reported quarterly revenue of $24.2 billion, up 12% from the previous year and exceeding Wall Street expectations of $22.7 billion. Adjusted earnings per share reached $1.55, surpassing analyst estimates of $1.47. The performance reflects 14% organic sales growth, signaling robust demand across the company's diversified portfolio of military systems, jet engines, and aerospace components.
"Our strong performance in 2025 demonstrates our focus on operational excellence and execution," said RTX Chairman and CEO Chris Calio in the company's earnings announcement. "We enter 2026 with significant momentum and confidence in our ability to deliver value for our customers and shareholders."
The company's full-year 2025 results showed substantial improvement, with sales climbing 10% to $88.6 billion and adjusted earnings per share rising 10% to $6.29. Free cash flow jumped $3.4 billion to $7.9 billion, a significant operational improvement that underscores the company's ability to convert revenue into cash even as it invests in new capabilities and production capacity.
Looking ahead, RTX provided upbeat guidance for 2026, projecting sales between $92 billion and $93 billion with organic growth of 5% to 6%. The company expects adjusted earnings per share of $6.60 to $6.80 and free cash flow of $8.25 billion to $8.75 billion, representing continued expansion across key financial metrics.
Perhaps most notably, RTX's backlog of orders has swollen to a record $268 billion, providing visibility into future revenue through 2028 and beyond. The backlog includes $161 billion in commercial orders and $107 billion in defense contracts, reflecting balanced demand across both segments of the business.
The strong results come amid what analysts describe as a favorable environment for defense contractors, driven by geopolitical tensions and increased government defense spending globally. The commercial aerospace recovery has also accelerated, with particular strength in aftermarket services for jet engines and aircraft maintenance.
"We continue to see robust demand across our portfolio, from next-generation military capabilities to commercial aerospace aftermarket services," the company stated, highlighting investments in new production capacity to meet growing orders.
Analysts maintain a positive outlook on RTX shares, with a consensus "Buy" rating and an average price target of $202.83, according to current market data. The stock has gained more than 75% over the past 12 months, outperforming broader market indices and reflecting investor confidence in the defense sector's prospects.
The company's performance also stands out against the backdrop of a broader defense sector rally, as major contractors benefit from increased government budgets and heightened demand for advanced military systems, cybersecurity capabilities, and space technology.
However, some analysts caution that defense stocks carry valuation risks after a prolonged period of outperformance. RTX currently trades at approximately 29.5 times forward earnings, above historical averages for traditional defense contractors but reflecting the company's mix of defense and commercial aerospace exposure.
For 2026, investors will be watching RTX's execution on its ambitious backlog, the pace of commercial aerospace recovery, and the company's ability to manage supply chain challenges that have affected the broader aerospace industry. The company's guidance assumes continued operational improvement and successful integration of recent acquisitions, which could present execution risks if macroeconomic conditions deteriorate.
RTX's quarterly performance and upbeat outlook reinforce its position as one of the industry's most diversified aerospace and defense contractors, with exposure to both the resilient defense market and the recovering commercial aviation sector. The record backlog provides revenue visibility, while the improved free cash flow generation suggests the company can fund growth initiatives while maintaining shareholder returns.