Raytheon Technologies: Positive Forecast Leading into Q2 Earnings

Raytheon Technologies (NYSE: RTX) is set to unveil its second-quarter 2025 financial results on July 22, marking a significant occasion for investors looking for insight into the company’s future growth prospects. With a substantial backlog of orders, favorable conditions in the defense and aerospace industries, and a track record of outperforming earnings projections, RTX presents a compelling opportunity for investment. In this analysis, we will explore the drivers of growth, the potential valuation of the company, and the reasoning behind considering a long-term position in advance of the earnings announcement.

The defense sector continues to play a pivotal role in RTX’s growth trajectory, benefiting from increased defense expenditures worldwide. Governments globally are focusing on upgrading their military capabilities, with the U.S. Department of Defense allocating substantial budgets to areas such as combat systems, cybersecurity, and advanced propulsion technologies. RTX’s Collins Aerospace and Raytheon units are at the forefront of these developments, supplying essential components for fighter jets, missiles, and satellite networks. As of June 2025, RTX’s total order backlog amounted to $218 billion, with $93 billion in defense contracts and $125 billion in commercial aerospace agreements. This backlog provides visibility into future revenue, with defense contracts representing about 40% of the total. RTX’s expertise in hypersonic systems, electronic warfare, and fifth-generation fighter upgrades positions the company well to benefit from geopolitical tensions and military modernization efforts.

While defense remains a core driver of growth, RTX’s commercial aviation division is showing signs of recovery. The post-pandemic rebound in air travel demand, combined with the retirement of older aircraft, has resulted in increased orders for Pratt & Whitney engines and Collins’ aviation components. Airlines are increasingly focused on adopting fuel-efficient and sustainable technologies, aligning with RTX’s innovation pipeline, which includes developments in electric propulsion systems and carbon-neutral aviation initiatives. Analysts anticipate a 4.46% year-over-year increase in revenue for the second quarter of 2025, driven by both defense and commercial segments. The consensus estimate for earnings per share (EPS) of $1.43 reflects a modest 1.7% rise from the same period in 2024, with the possibility of surpassing this figure given RTX’s history of exceeding projections. Over the past year, RTX has beaten EPS estimates in every reporting period, with an average beat of 8%.

From a valuation perspective, RTX’s forward price-to-earnings (P/E) ratio of 22.81 and price-to-earnings growth (PEG) ratio of 2.12 indicate that the stock may be trading at a premium compared to its historical averages. However, these valuations are supported by the company’s long-term growth prospects. The projected EPS growth of 17.98% for the full year 2025 implies a trajectory from $5.73 in 2024 to $6.76 in 2025, although RTX later revised its 2025 EPS target to $6.00–$6.15. Despite this adjustment, RTX’s stock price has maintained levels above $140 since early 2025, outperforming the S&P 500 by 12% year-to-date. With a dividend yield of 1.4% and a history of share repurchases, RTX offers a blend of growth potential and income for investors.

As investors await the second-quarter results, two key factors are worth monitoring. First, RTX’s ability to secure new defense contracts, particularly in hypersonic systems and missile defense, as well as international partnerships, could expand its backlog. Second, margin improvements in the commercial aviation segment, driven by higher aircraft deliveries and supply chain efficiencies, may enhance profitability, especially as airlines emphasize long-term partnerships with suppliers like RTX.

In conclusion, Raytheon Technologies stands as a prominent player in global defense and aerospace markets, with a strong backlog, a history of surpassing earnings estimates, and a valuation based on long-term growth prospects. Despite revised EPS guidance for 2025, the company’s technological leadership and consistent performance justify considering a long-term investment position, particularly if the stock experiences a decline before the earnings release. Potential risks, such as delays in defense contracts or supply chain disruptions, should be monitored. The earnings report on July 22 will be a critical gauge of RTX’s performance, but fundamental factors suggest that this is a stock worth holding for the future.