Leidos vs. RTX: Which Defense Tech Stock Is Poised for Stronger Growth?

Over the last decade, global defense priorities have shifted toward digital warfare, integrated networks and AI-powered intelligence systems. Consequently, investor attention has shifted to defense technology stocks like Leidos Holdings LDOS and RTX Corp. RTX, which, despite their differing core business models, are increasingly converging in areas such as cybersecurity and digital defense.While Leidos operates as a leading government IT and engineering services provider, specializing in cybersecurity, surveillance, logistics and data analytics, RTX is a defense manufacturing powerhouse, delivering advanced physical systems, such as missile defense, hypersonics, radar and avionics, in addition to transformative technologies. Notably, RTX’s BBN, business division, known for its work in areas like networking, cybersecurity and artificial intelligence, has a long history of innovation, including contributions to the development of the first email. As digital and physical defense increasingly intersect with the accelerating defense tech race amid the rising complexity of modern warfare, an investor might be left with the question: Which stock offers stronger, more sustainable upside in 2025? Let’s delve deeper into their fundamentals to get that answer.Financial Stability & Growth Drivers: LDOS vs RTXAt the end of the first quarter of 2025, Leidos Holdings’ cash and cash equivalents totaled $0.84 billion, while its current debt amounted to $0.12 billion. So, it would be safe to conclude that LDOS holds a strong solvency position in the near term, which should enable it to continue investing in its AI-powered cybersecurity solutions for defense, intelligence and homeland security. It also provides the company with the financial flexibility to pursue strategic acquisitions, such as its recent purchase of Kudu Dynamics, to support future growth.Such a solid financial position has also enabled LDOS to reward its shareholders with dividends worth $53 million. Leidos also purchased shares worth $528 million on the open market in the first quarter, reflecting a solid year-over-year increase of 188.5%. As of March 31, 2025, RTX’s cash and cash equivalents totaled $5.16 billion, while its current debt of $3.06 billion remained well below the cash reserve. This reflects a solid solvency position for RTX over the short term, which should enable it to continue investing in innovative technologies like hypersonics, counter-hypersonics, next-generation radars and sensors within the aerospace-defense industry. Such a solid financial position must have enabled RTX to repurchase shares worth $50 million in the first quarter. From the perspective of growth drivers, the expansionary U.S. defense budget stands out as a major catalyst for both Leidos Holdings and RTX. The proposed 13% hike in the U.S. defense budget for fiscal 2026, including a significant investment for the development and deployment of a Golden Dome, a next-generation missile defense shield that would protect the United States from missile threats coming from any adversary, raises hope for both these stocks. Notably, LDOS believes that it is well-positioned to contribute meaningfully to the Golden Dome mission with its next-generation sensor and missile defense capabilities like those used recently in the defense of Guam.  On the other hand, RTX enjoys a long-standing collaboration with Rafael Advanced Defense Systems on Israel’s Iron Dome, which inspired the Golden Dome concept. Another growth catalyst benefiting both Leidos and RTX is rapidly growing commercial air travel. Notably, Leidos’ aviation solutions are integral to global air traffic management, supporting operations in 60% of the world’s air traffic and 80% of oceanic airspace. On the other hand, RTX’s Pratt & Whitney unit is a renowned jet engine manufacturer, with its GTF (Geared Turbofan) engines currently being the most fuel-efficient engines for the single aisle market. Its Collins Aerospace unit has been manufacturing aerostructures and cabin interiors for commercial jets for many years now. The company also serves the commercial aircraft aftermarket industry. Beyond defense and commercial aerospace, Leidos benefits from a highly diversified portfolio that spans sectors such as healthcare, energy, commercial aviation, space and advanced scientific research. This broad industry exposure helps reduce reliance on any single market and creates multiple revenue streams, enhancing the stock’s stability and long-term growth potential.RTX also has a prominent presence in the space industry, with its Raytheon unit providing end-to-end space solutions – from ground control systems to on-orbit sensors.Risks of Investing in Leidos and RTXDespite strong demand and long-term growth prospects, manufacturers like Leidos and RTX continue to grapple with persistent supply-chain and labor challenges. Global shortages of critical materials, such as semiconductors and rare earth elements, remain a significant hurdle, exacerbated by heavy dependence on key suppliers like China and Russia. These issues, which intensified during the pandemic, have been further strained by ongoing geopolitical tensions, increasing raw material costs and causing delays in the production and delivery of defense systems.Adding to this pressure, the U.S. government has introduced broad tariffs on major trading partners. As both LDOS and RTX depend on other nations for the supply of raw materials for their products, such policies could disrupt already fragile global supply chains and further inflate their operational expenses.Labor shortages pose another major threat. According to the 2024 AIA-PwC "On the Horizon" Workforce Study, the aerospace-defense sector faces a 13% attrition rate, well above the U.S. average of 3.8%, driven by retirements and high turnover. This talent gap could affect production timelines and quality control, particularly in specialized areas like aviation systems and advanced technologies. In the near term, these headwinds may limit operational efficiency and weigh on profitability for both companies.How Do Zacks Estimates Compare for LDOS & RTX?The Zacks Consensus Estimate for Leidos’ 2025 sales implies a year-over-year rise of 2.7%, and the same for its earnings suggests growth of 4.8%. The consensus estimate for 2026 also reflects a similar improvement. The stock’s annual bottom-line estimates have shown an upward trend over the past 60 days. Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for RTX’s 2025 sales and earnings implies a year-over-year rise of 4.2% each. The consensus estimate for 2026 also reflects a similar improvement. The stock’s annual bottom-line estimates have, however, shown a downward trend over the past 60 days.Image Source: Zacks Investment ResearchStock Price Performance: LDOS vs RTXLDOS (up 13.5%) has outperformed RTX (up 6%) over the past three months but has underperformed in the past year. Shares of RTX have surged 40.5%, while those of LDOS have risen 4.6% in the past year.Image Source: Zacks Investment ResearchValuation of LDOS More Attractive Than That of RTXLDOS is trading at a forward earnings multiple of 13.95X, below RTX’s 22.32X.Image Source: Zacks Investment ResearchROE: LDOS vs RTXThe image below shows that LDOS’s Return on Equity (“ROE”) came in higher than that of RTX. This indicates that Leidos is generating greater profit than shareholder equity, reflecting more efficient capital utilization.Image Source: Zacks Investment ResearchFinal CallBoth Leidos and RTX offer distinct yet increasingly overlapping investment propositions in today’s evolving defense landscape. Leidos stands out for its strategic focus on AI-powered cybersecurity, surveillance and aviation systems, while its exposure to diversified end-markets provides resilience and multi-stream revenue growth. Meanwhile, RTX, with industry-leading technologies in missile defense, hypersonics, and jet engines, and a long legacy in advanced digital capabilities (through its BBN unit), is well-positioned to support modern warfare’s physical and digital demands.While the Zacks Consensus Estimate shows stronger top-line growth for RTX in 2025, Leidos scores higher on profitability metrics like Return on Equity and trades at a more attractive valuation. Its recent stock performance and upward-trending earnings revisions further validate investor confidence.For those seeking a forward-looking defense tech stock with diversified growth and capital efficiency, Leidos stands out as the smarter, more resilient stock in today’s fast-evolving security landscape.LDOS carries a Zacks Rank #3 (Hold) at present, while RTX has a Zacks Rank #4 (Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Leidos Holdings, Inc. (LDOS): Free Stock Analysis Report RTX Corporation (RTX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks