RTX Corporation: A Case Study in Sustained Outperformance in Aerospace and Defense

In an era of volatile markets and shifting geopolitical priorities, Raytheon Technologies Corporation (RTX) has emerged as a standout performer in the aerospace and defense sector. From 2023 to 2025, the conglomerate has consistently outpaced expectations, leveraging a robust backlog, strategic innovation, and a favorable macroeconomic environment to deliver exceptional financial results. This analysis examines RTX's trajectory, highlighting how its dual focus on defense modernization and aerospace electrification positions it as a compelling long-term investment.

A Decade of Resilience: 2024's Record-Breaking Performance

RTX's 2024 results underscore its ability to capitalize on structural tailwinds. The company reported full-year sales of $80.7 billion, a 17% year-over-year increase, with adjusted earnings per share (EPS) rising 13% to $5.73, according to RTX's 2024 report. This growth was underpinned by a $218 billion backlog as of January 2025, with defense contracts accounting for $93 billion-a testament to the sector's resilience amid global instability, as noted in that report. Free cash flow surged to $4.5 billion in 2024, enabling aggressive capital returns and debt reduction, according to a Monexa analysis.

The defense segment, in particular, demonstrated exceptional momentum. Raytheon's fourth-quarter 2024 sales rose 4% to $7.2 billion, driven by surging demand for land and air defense systems, as highlighted in the Monexa analysis. Meanwhile, Pratt & Whitney's F135 engine, which powers the F-35 Lightning II, saw a 31% increase in commercial original equipment (OE) sales, reflecting the Pentagon's urgent need for modernized fighter jets, per the RTX report.

2025 Outlook: Accelerating Growth in a High-Demand Environment

RTX's 2025 guidance reinforces its outperformance narrative. The company projects adjusted sales of $83.0–$84.0 billion and adjusted EPS of $6.00–$6.15, representing 4–6% organic growth, according to its guidance. This optimism is grounded in a $251 billion backlog as of Q3 2025, with defense contracts expanding to $93 billion, according to a Panabee analysis. Notably, Raytheon's operating margin expanded by 180 basis points to 12.2% in Q3 2025, driven by favorable program mix and productivity gains in international Patriot systems, as reported in RTX's Q3 2025 results.

The aerospace segment is also gaining traction. Collins Aerospace's electric thrust reverser systems, deployed in Europe, offer a 15% weight reduction and 8% fuel efficiency gains-critical advantages in an industry grappling with decarbonization mandates, according to the RTX report. Meanwhile, Pratt & Whitney's Geared Turbofan (GTF) engines secured a landmark order from Frontier Airlines for 91 A321neo aircraft, supported by a $3.2 billion long-term service agreement with Lufthansa, as noted in the Panabee analysis.

Strategic Innovation: Defense Modernization and Aerospace Electrification

RTX's sustained outperformance stems from its ability to align with macro trends. The defense sector, fueled by U.S. and NATO spending, is projected to grow at a 5% CAGR through 2030, according to the Strategy Playbook. RTX is capitalizing on this by ramping up production of hypersonic weapons, missile defense systems, and next-generation propulsion technologies. For instance, a $1.1 billion contract for AIM-9X Block II missiles in 2025 underscores its leadership in short-range air-to-air combat, as detailed in the RTX report.

In aerospace, RTX's pivot to electrification is paying dividends. The company's investment in Europe-where the European Union's Green Deal mandates a 90% reduction in aviation emissions by 2050-positions it to lead in hybrid-electric propulsion and sustainable aviation fuels. This strategic foresight is reflected in its Q3 2025 results, where Collins Aerospace's commercial aftermarket sales grew 12% year-over-year, as discussed in the Monexa analysis.

Risks and Mitigants: Navigating a Complex Landscape

Despite its strengths, RTX faces headwinds. Boeing's production delays and the GTF engine's reliability issues could temporarily pressure aerospace margins, a point made in the Strategy Playbook. However, the company's $3.7 billion capital returns in 2024 and a $7.0–$7.5 billion free cash flow forecast for 2025 demonstrate its financial flexibility to weather short-term challenges, according to the RTX report.

Moreover, RTX's diversified portfolio-spanning defense, commercial aviation, and high-margin service contracts-reduces exposure to any single risk. For example, its $3.2 billion service agreement with Lufthansa ensures steady cash flow, while its defense backlog provides insulation against cyclical downturns, as noted in the Panabee analysis.

Conclusion: A Compelling Investment Thesis

RTX's sustained outperformance is a product of strategic foresight, operational discipline, and a favorable industry tailwind. With a $251 billion backlog, a 12.2% operating margin in defense, and a clear roadmap for electrification, the company is well-positioned to deliver above-market returns. For investors seeking exposure to the aerospace and defense sectors, RTX offers a rare combination of growth, resilience, and innovation.