RTX Wins $205M Contract for Radar-Guided Gun: Buy the Stock Now?

Core Insights - RTX Corp.'s Raytheon secured a $205 million contract for the Phalanx Close-In Weapon System, which includes production, upgrades, and related support [1][9] - The contract reinforces RTX's position as a leader in radar expertise and may attract defense investors seeking growth [2] - A comprehensive investment decision should consider the company's fundamentals, growth outlook, and market performance [3] RTX YTD Performance - RTX shares have increased by 33.3% year-to-date, outperforming the Zacks Aerospace-Defense industry's 27.8% and the broader Aerospace sector's 26.3% [4] - Other defense contractors like Boeing and General Dynamics also saw significant share price increases of 30.5% and 22.5%, respectively [5] Growth Catalysts - RTX secured $12 billion in defense bookings in Q2 2025, resulting in a defense backlog of $92 billion as of June 30, 2025 [6][9] - The substantial backlog indicates sustained demand for RTX's defense systems and provides visibility into future revenues [7] Financial Strength - As of June 30, 2025, RTX reported $4.78 billion in cash against $3.72 billion in current debt, indicating strong short-term solvency [11] - The stock's interest coverage improved to 5.2, and its current ratio of 1.01 confirms adequate liquidity [11] Earnings and Sales Estimates - The Zacks Consensus Estimate for Q2 2025 revenues suggests a 6.1% improvement year-over-year, while earnings are expected to rise by 3.5% [13] - However, near-term earnings estimates have declined over the past 60 days, indicating reduced analyst confidence [13] Valuation - RTX's forward 12-month price-to-earnings (P/E) ratio is 24.07X, which is a premium compared to its peer group's average of 23.91X [19] Conclusion - RTX benefits from a solid defense backlog, strong liquidity, and consistent contract momentum, but its premium valuation and supply-chain risks warrant caution [21] - Existing holders may continue to hold the stock due to its market outperformance and revenue growth outlook [22]