RTX Corporation $RTX ( ▲ 0.17% ) is a $81B aerospace and defense powerhouse formed from the 2020 merger of United Technologies and Raytheon. The company operates three distinct but complementary businesses: Collins Aerospace (aircraft systems), Pratt & Whitney (jet engines), and Raytheon (defense systems). With a $218B backlog providing 2.7 years of locked-in revenue, RTX benefits from two powerful trends—rising global defense spending and recovering commercial aviation demand. While the company faces near-term challenges from powder metal issues in its GTF engines and supply chain pressures, its market-leading positions, massive R&D investment ($7.7B annually), and diversified revenue streams make it a solid dividend-paying industrial for long-term investors who believe in the future of flight and defense.

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Think of RTX as the company that makes flying possible—and keeps the bad guys at bay. Born from the 2020 marriage of United Technologies and Raytheon Company, RTX is essentially three companies in a trench coat, each doing something completely different but all related to making things fly, fight, or both.

Collins Aerospace ($28.3B revenue ↗️) is like the interior designer and electrician for aircraft. They make everything from the cockpit displays that pilots stare at during turbulence to the landing gear that (hopefully) deploys when you're coming in for landing. Think of them as the company that makes planes "smart"—avionics, environmental systems, even the fancy seats in first class. Their sweet spot? Aftermarket services, where they maintain and repair all the stuff they originally installed. It's the classic "sell the razor, profit from the blades" model, except the blades cost millions and keep planes from falling out of the sky.

Pratt & Whitney ($28.1B revenue ↗️) builds the engines that actually make planes go vroom. Their crown jewel is the Geared Turbofan (GTF) engine family, which powers over 2,200 aircraft worldwide and burns 15-20% less fuel than older engines. Here's where it gets interesting: they often sell engines at break-even or even losses initially, then make bank over the engine's 20-30 year lifespan through maintenance contracts and spare parts. It's like giving away printers to sell expensive ink cartridges, except the ink cartridges cost hundreds of thousands of dollars and keep 300 people alive at 35,000 feet.

Raytheon ($26.7B revenue →) is the "defense" part of the equation—they make missiles, radars, and other things that go boom (or prevent things from going boom). Think Patriot missile defense systems, Tomahawk cruise missiles, and radar systems so advanced they can probably tell you what the pilot had for breakfast. Their business model revolves around long-term government contracts that often span decades, with built-in modernization and upgrade opportunities.

RTX's revenue streams are beautifully diversified:

The company operates on a "razor and blades" model across all segments. They'll sell you the initial equipment (sometimes at thin margins), then make their real money on the 20-30 year aftermarket relationship. It's a beautiful business model when it works—sticky customers, predictable cash flows, and high switching costs.

RTX obsesses over several key metrics:

The company's manufacturing footprint is massive—230 facilities across 30 countries with 186,000 employees. About 68% of employees are in the U.S., which matters for security clearances and government contracts.

RTX operates in markets where being second place often means being irrelevant. These are winner-take-most industries with massive barriers to entry, long development cycles, and customers who really, really care about reliability.

In commercial aerospace, RTX faces a fascinating dynamic. The aircraft market is essentially a Boeing-Airbus duopoly, making supplier relationships crucial. Collins Aerospace battles Honeywell, Safran, and Thales for systems contracts, while Pratt & Whitney is locked in an epic three-way engine war with GE Aerospace and Rolls-Royce. The GTF engine has been Pratt's secret weapon, offering superior fuel efficiency that airlines love (especially when fuel costs $100+ per barrel).

The defense market is a different beast entirely. Here, RTX competes against Lockheed Martin, Boeing Defense, Northrop Grumman, and General Dynamics. However, unlike commercial markets where price often prevails, defense contracts tend to favor technological capability, security clearances, and long-standing relationships. Raytheon's Patriot system, for example, has been protecting allies since the 1980s—that's the kind of sticky customer relationship that makes CFOs smile.

The Good: RTX has been winning big international defense contracts, particularly as NATO allies boost defense spending. Germany ordered $2.4B worth of Patriot systems in 2024, and Poland, Romania, and others are lining up. The commercial aerospace recovery has been strong, with Collins benefiting from increased flight hours driving aftermarket demand.

The Not-So-Good: The powder metal issue that hit Pratt & Whitney's GTF engines in 2023 continues to cause headaches. While manageable within existing reserves, it's keeping aircraft grounded longer than anyone wants. Supply chain disruptions and inflation have also pressured margins across the industry.

RTX holds enviable positions across its markets:

The company's scale advantages are real—$7.7B in R&D spending buys a lot of innovation, and their global manufacturing footprint provides both cost advantages and local market access.

RTX's financials tell the story of a company that's finally hitting its stride after years of integration challenges and pandemic disruption.

By Segment (2024):

The near-perfect balance between segments is no accident—it provides stability when one market hits turbulence. When commercial aerospace struggled during COVID, defense kept the lights on. Now that commercial is recovering, both engines are firing.

By Geography:

By Customer Type:

Operating margins improved dramatically in 2024:

Collins consistently delivers the best margins thanks to their aftermarket-heavy business model. Raytheon's margins reflect the steady, profitable nature of defense contracts. Pratt & Whitney's margins are more volatile, reflecting the cyclical nature of engine deliveries and the impact of the powder metal matter.

Believe This: The world is becoming more dangerous and more connected, driving demand for both defense systems and commercial aviation.

For the bull case to work, you need to believe:

The Risks Are Real: RTX operates in cyclical, capital-intensive industries with long development cycles and demanding customers.

The bear case worries about:

RTX is a high-quality industrial company with strong market positions, diversified revenue streams, and significant barriers to entry protecting its businesses. The company has successfully navigated the challenging integration of three major businesses while dealing with pandemic disruption and supply chain chaos.

The investment thesis is straightforward: RTX benefits from two powerful long-term trends—increasing global defense spending and growing commercial aviation demand. The company's technology leadership, manufacturing scale, and customer relationships create sustainable competitive advantages.

However, this isn't a growth stock—it's a steady industrial that will likely deliver returns in line with GDP growth plus dividends. The powder metal issue shows how operational problems can create significant near-term volatility, even for established companies.

The Verdict: RTX is a solid, dividend-paying industrial for investors who believe in the long-term growth of aerospace and defense markets. Just don't expect it to be exciting—unless you find missile defense systems and jet engines as thrilling as we do. 🚀

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Disclaimer: This guide is for informational purposes only and does not constitute financial advice, investment recommendations, or an offer or solicitation to buy or sell any securities. The information contained in this report has been obtained from sources believed to be reliable, but StrataFinance does not guarantee its accuracy, completeness, or timeliness.