Report: Thursday, July 23, before the market opens
Conference call: 7:30 a.m. ET (rtx.com)
RTX enters the report with unusually strong demand in both halves of its portfolio: commercial aerospace aftermarket activity remains elevated, while global demand for air defense, missiles and munitions continues to exceed available industrial capacity.
The central question is therefore not whether demand is strong—it is whether RTX can convert that demand into higher output, margins and cash flow without encountering supply-chain, GTF or program-execution setbacks.
Expectations are also elevated. RTX already raised its 2026 sales and EPS guidance after a strong first quarter, and the stock trades near $195, or roughly 28.7 times the midpoint of current-year adjusted EPS guidance. A modest headline beat may not be enough unless management also provides reassuring updates on Raytheon production, GTF fleet health and the full-year outlook. (rtx.com)
| Metric | Q2 2026 consensus | Q2 2025 actual | Implied growth |
|---|---|---|---|
| Revenue | $22.87B | $21.58B | ~6% |
| Adjusted EPS | $1.66 | $1.56 | ~6% |
Consensus figures are approximately $22.87 billion of revenue and $1.66 of adjusted EPS. Last year’s quarter included $21.6 billion of sales, $1.56 of adjusted EPS and slightly negative free cash flow, with cash generation affected by the Pratt & Whitney work stoppage. (benzinga.com)
RTX’s existing full-year outlook is:
The company raised sales and EPS guidance in April but left free-cash-flow guidance unchanged. (rtx.com)
Raytheon was the standout business in Q1:
The demand environment has only become more supportive. Air and missile defense, counter-drone systems, AMRAAM, Patriot, Tomahawk and the Standard Missile family are all aligned with current U.S. and allied priorities. RTX is investing heavily in capacity: among other targets, it plans to lift annual AMRAAM production above 1,900 and Tomahawk production to 1,000. (rtx.com)
Key risk: Demand can grow faster than the supply base. A weaker bookings quarter would not necessarily be concerning because defense awards are lumpy; disappointing output or unfavorable contract-estimate adjustments would matter much more.
Pratt began the year strongly, with Q1 sales up 11%, operating profit up 22% and segment margin of 8.7%. Commercial aftermarket growth was the principal driver, while commercial OE volume declined as RTX prioritized scarce material between new-engine production and the MRO network. (sec.gov)
Management said PW1100 MRO output increased 23% year over year in Q1. That throughput is the key mechanism for reducing grounded aircraft and limiting customer compensation associated with the powder-metal issue. (investors.rtx.com)
Recent orders confirm that the GTF franchise retains commercial momentum. Pratt has announced more than 800 GTF orders and commitments in 2026, including British Airways’ selection for 33 firm aircraft and 30 options with a 12-year services agreement. Those awards support the long-term installed-base and aftermarket thesis, but they do little for near-term earnings if MRO and parts production cannot keep pace. (rtx.com)
A good quarter is not simply one in which Pratt reports higher aftermarket sales. The higher-quality outcome would combine aftermarket growth, falling AOGs, faster MRO output and no deterioration in the powder-metal financial outlook.
Collins produced strong Q1 results despite commercial OE mix and tariff pressure. Organic sales growth came from all three channels—commercial OE, commercial aftermarket and defense—while lower R&D spending also helped profitability.
The segment faces several competing forces in Q2:
Positive
Potential headwinds
Commercial aftermarket is the key swing factor. Parts and repair should be relatively resilient, while provisioning and modifications are more exposed if airlines reduce inventories or defer discretionary work.
What good looks like: organic growth across all channels and a margin at least near last year’s Q2 adjusted level of 16.4%. A margin materially below that level, absent a clear mix explanation, would raise questions about whether Q1 profitability was unusually favorable.
RTX’s first-quarter performance already prompted a $500 million sales-guidance increase and a $0.10 EPS increase. Consequently, the market is likely looking for at least one of the following:
A guidance raise is not guaranteed. Management may retain flexibility because of geopolitical volatility, commercial air-travel uncertainty, supply constraints and the timing of defense awards. But with “beat-and-raise” expectations elevated, a small EPS beat paired with unchanged guidance could receive a muted or negative reaction.
The highest-quality guidance outcome would be an EPS increase driven by segment operating profit—not merely lower interest, taxes or tariff-related recoveries.
Q1 free cash flow was $1.3 billion, leaving RTX well positioned against its $8.25B–$8.75B full-year objective. The Q2 comparison is also easy because last year’s quarter had a $72 million free-cash-flow outflow following the Pratt strike. (rtx.com)
Still, RTX’s cash requirements are substantial:
Investors should focus less on the standalone quarterly number than on whether management reaffirms the full-year cash range without pulling forward receivables, increasing factoring or relying on one-time items.
RTX disclosed that it had paid approximately $500 million of IEEPA tariffs and had not recognized a recovery as of March 31 because the refund process remained uncertain. Management had also assumed ongoing tariff mitigation in its operating outlook. (sec.gov)
A refund or favorable accounting treatment could eventually provide upside, but investors should separate that from underlying segment performance. Conversely, new tariff regimes, supply-chain mapping requirements or restrictions involving China and other foreign suppliers could create fresh costs.
The cleaner report would show earnings strength before any tariff refund benefit.
These are analytical thresholds rather than formal consensus estimates:
RTX has one of the strongest demand backdrops in large-cap aerospace and defense, supported by a $271 billion backlog, including $162 billion commercial and $109 billion defense at the end of Q1. (sec.gov)
The Q2 debate is about execution and expectations. Raytheon should remain the principal earnings-upside engine, Pratt’s MRO performance must demonstrate that the GTF recovery is progressing, and Collins needs to preserve margins through a heavier OE ramp. Given the valuation and the strong Q1, investors should demand more than a routine consensus beat.
The most consequential datapoints will be Raytheon production and margin, the GTF AOG trajectory, and whether RTX raises—or credibly leans toward the upper end of—its 2026 EPS outlook while preserving free-cash-flow guidance.