RTX Corporation RTX
Verdict: Strong sell. Fair value $102 against a price of $190 on 6 Jan 2026, 46% below the price.
In plain words
The case for: Wide competitive moat provides durability. Market leadership enables pricing power. Industry tailwinds with growing market.
The case against: Macro headwinds could impact growth. Valuation multiple compression risk.
Main risks
- Extremely poor return on capital (ROIC ~2.8%) suggests massive inefficiency in deploying its large capital base, failing to earn above a reasonable cost of capital.
- Negative 3-year ROIIC (-13.2%) indicates recent investments have been value-destructive, a major capital allocation failure and a severe red flag.
- High leverage with a proxy Debt/EBITDA ratio of ~5.4x, coupled with thin and volatile margins, poses significant financial risk and reduces operational flexibility.
- Valuation prices in optimistic scenario (limited margin for error)
- Overbought (RSI: 72)
- Market volatility