RTX Corporation

Most defense contractors live and die by the congressional budget cycle. RTX is unusual because roughly half its revenue — through Pratt & Whitney and Collins Aerospace — is tied to commercial aviation: airlines buying new engines for Boeing and Airbus jets, and paying for decades of maintenance, repair, and overhaul (MRO) services. Commercial aviation aftermarket revenue is among the most durable in all of industrials: once an airline buys an engine, it enters a 25-30 year service relationship with the OEM to maintain airworthiness certification. Pratt & Whitney's LEAP and GTF engine programs have thousands of installed units feeding that MRO revenue stream.

This diversification matters most during defense budget uncertainty. When Congress argues over continuing resolutions and Defense Department spending is temporarily constrained, RTX's commercial segment continues delivering — partially offsetting any slowdown in Raytheon missile orders. Conversely, when commercial aviation slows during recessions or traffic shocks, the defense segment provides ballast. No pure-play defense contractor offers this natural hedge, which is why RTX consistently trades at a premium multiple to the average defense name.

RTX entered 2026 still managing the Pratt & Whitney powder metal matter — a manufacturing defect in high-pressure turbine discs that required accelerated inspections across thousands of GTF-powered aircraft. The inspections removed planes from service temporarily, generating warranty costs and lost aftermarket revenue for Pratt. As RTX works through the inspection backlog, each passing quarter with declining inspection-related charges is a positive earnings catalyst. Traders should track the number of remaining affected engines quarterly: when the powder metal drag diminishes, RTX's true underlying earnings power becomes visible and estimates tend to revise upward sharply.

On the defense side, Raytheon is one of the primary beneficiaries of the global missile restocking cycle. NATO countries that drew down Patriot, AMRAAM, and Stinger inventories for Ukraine resupply need to rebuild stockpiles, and US domestic procurement of advanced missiles for Pacific deterrence scenarios is also accelerating. Missile programs tend to be cost-plus contracts with multi-year delivery schedules, providing the type of backlog visibility that justifies paying a premium multiple. Relative to LMT, RTX is the better choice when commercial aviation is strong and the powder metal headwinds are resolving; LMT is preferable when fixed-price defense programs are generating charges and the commercial aerospace cycle is weakening.