In seven weeks this autumn the Pentagon wrote RTX's Raytheon business three multiyear munitions contracts with combined ceilings near $68 billion: $22.9 billion in mid-August to lift Tomahawk output , up to $20.7 billion for AMRAAM awarded on September 25 and announced three days later , and up to $24.4 billion for the Standard Missile-6 on October 1 . The shares fell through all of it. At $184.68 on October 2, RTX trades 18.6% below the $226.88 high it reached in early August, with a market value of $248.9 billion .
Resolving that gap requires knowing what RTX actually is, because it is not a defense pure-play. The company runs three businesses of comparable size: Collins Aerospace, the avionics, interiors, nacelles and landing-systems supplier; Pratt & Whitney, which builds the geared turbofan powering the A320neo family and the sole-source F135 for the F-35; and Raytheon, the missiles and air-defense house. In 2025 they produced $30.2 billion, $32.9 billion and $28.0 billion of sales respectively, or $91.1 billion before intersegment eliminations against $88.6 billion consolidated. The record $289 billion backlog reported at June 30 splits $170 billion commercial and $119 billion defense . Nearly 70% of segment sales come from the two aerospace businesses, and both of them also sell to governments.
My argument is that the market has mistaken a fading geopolitical premium for a fading order book, and that the near-term operating evidence is better than the tape implies. But the drawdown has not made the stock cheap. It has made it reasonable, which is a different thing, and the variable that decides whether reasonable becomes attractive is a single line: Raytheon's margin on fixed-price production lots it has never built at these rates.
The slide began with profit-taking and finished on Tehran and the Treasury curve
Nothing in RTX's own results broke the stock. The second quarter, reported July 23, was the strongest of the post-merger era: adjusted sales of $24.7 billion rose 14% (16% organically), adjusted EPS of $1.89 rose 21%, free cash flow was $2.9 billion, and management raised all three...