RTX Earnings Preview: Aerospace Momentum and Defense Backlog Face Off Against Tariffs and Supply Chain Friction

RTX Corporation (NYSE: RTX) is set to report second-quarter earnings before the bell Tuesday, kicking off a busy week for aerospace and defense names, including GD, LMT, and NOC. The backdrop is a study in contrasts: a surging commercial aerospace recovery marked by global RPKs up 5.8% YTD and multi-year OEM backlogs, paired with sustained global defense spending as geopolitical risks remain elevated. RTX stands at the crossroads of both markets, with its commercial-heavy Collins and Pratt & Whitney divisions poised to benefit from increased aircraft production, while the Raytheon segment remains anchored by a $92 billion defense backlog and expanding foreign military sales.

WATCH: Alphabet’s Future Hinges on This One Call

Consensus estimates call for Q2 adjusted EPS of $1.43, up 1.4% year-over-year, and revenue of $20.63 billion, representing 4.1% growth. RTX’s full-year guidance remains intact as of Q1: adjusted sales of $83–84 billion, EPS of $6.00–6.15, and free cash flow of $7.0–7.5 billion. While that suggests continued confidence from management, analysts are closely watching for any guidance revisions related to tariffs, which the company flagged last quarter as a potential $850 million headwind to operating profit. Deutsche Bank expects a beat on Q2, but warned RTX may cut EPS guidance to formally account for tariff risks.

One swing factor this quarter is the lingering effect of a labor strike at Pratt & Whitney. While RTX has confirmed that material availability and forging capacity remain the primary bottlenecks in the GTF engine supply chain, any production shortfalls or disruptions to MRO output could weigh on segment results. On the Q1 call, management guided to a 30% full-year improvement in PW1100 MRO output and over 35% growth in the GTF Advantage program, but execution will be key. FAA certification of the upgraded engine was achieved earlier this year, and initial deliveries to Airbus are scheduled before year-end.

From a segment perspective, Collins Aerospace remains a bright spot. In Q1, it posted $7.22 billion in sales, driven by 13% growth in commercial aftermarket and 10% growth in defense. Analysts expect momentum to continue as Boeing ramps aircraft production and global travel normalizes. With global commercial OEM demand outstripping supply, Collins' exposure to cabin systems, avionics, and mechanical systems puts it in a strong structural position. Likewise, any signs of order pull-through or backlog acceleration at Collins will be viewed positively.

The Raytheon segment remains more mixed. While it booked $6.34 billion in Q1 sales, slightly below expectations, organic growth was solid at 2%. Recent developments include progress on the LTAMDS radar program and broader demand for integrated air and missile defense systems. RTX now sees 46% of its defense backlog tied to international programs—up from 36% at the end of 2023—a key margin tailwind given the richer pricing on foreign military sales. Europe’s rearmament push, in particular, offers upside optionality. Still, the recent EPS cut from peer Northrop Grumman and flat outlook from Lockheed have tempered enthusiasm across the defense complex.

On the macro front, tariffs remain a headline concern. RTX has acknowledged that the cost impact will likely materialize in the second half of 2025, primarily hitting commercial operations. While management has laid out mitigation strategies—including pricing adjustments and contract rollovers—investors are seeking clarity on how much of the $850 million drag is embedded in existing guidance.

Despite these concerns, the long-term setup for RTX remains constructive. Commercial aerospace backlogs at Boeing and Airbus remain robust, with Boeing alone holding over 6,500 aircraft orders. RTX’s positioning as a Tier 1 supplier gives it a durable earnings stream as aircraft deliveries resume and maintenance demand surges. Meanwhile, on the defense side, missile and radar systems remain in high demand, with the company guiding to a book-to-bill of 1.0 or higher in the Raytheon segment.

Investors will also be listening for any updates on capital allocation. With shares rebounding but still well below recent highs, management’s posture on buybacks—or lack thereof—could signal how confident they are in near-term upside. In Q1, RTX generated $792 million in free cash flow and reiterated its full-year target of up to $7.5 billion. But the disappearance of share repurchases, paired with a lofty valuation (~23.5x FY25 EPS), has left some questioning whether management sees value at current levels.

In summary, RTX’s Q2 report will be a critical read on both the commercial and defense sides of the aerospace sector. Execution on GTF deliveries, stability in aftermarket demand, resilience in defense margins, and clarity on tariff headwinds will all be in focus. With expectations elevated after a strong report from GE and the defense group under scrutiny following NOC’s guide-down, RTX has little margin for error. But if management can deliver a clean print with reaffirmed guidance and positive commentary on both end markets, the stock may be poised to reclaim recent losses.