RTX Stock: Does Barracuda Anti-Mine's Success Signal a Buying Opportunity?

RTX Corp.’s RTX business segment, Raytheon, has recently tested its Barracuda mine neutralization vehicle in untethered, semi-autonomous mode for the first time. The system successfully navigated, communicated and identified underwater threats, thereby demonstrating its naval mine countermeasure capabilities. As the U.S. Navy’s latest program of record, Barracuda is set for initial operational capability by 2030. RTX is currently developing larger and modern variants of Barracuda to support broader missions like subsea and seabed warfare.Barracuda’s successful demonstration highlights RTX’s leadership in next-gen advanced defense technology. This, in turn, may attract investors to add this stock to their portfolio right away. However, rather than making a hasty decision, it’s worth taking a closer look at RTX’s recent stock performance, growth prospects, valuation and potential risks to investing in it.RTX YTD PerformanceRTX’s shares have gained 26.3% in the year-to-date period, outperforming the Zacks Aerospace-Defense industry’s surge of 21.3% and the broader Zacks Aerospace sector’s rise of 21.8%. The stock has also outpaced the S&P 500’s return of 5.2%.Image Source: Zacks Investment ResearchNotable gains at the bourses have also been reflected in the share prices of other prominent defense contractors, such as The Boeing Company BA and General Dynamics GD, over the year-to-date period. Shares of Boeing surged a solid 28.1%, while those of General Dynamics rose 13.9%.RTX Stock’s Growth CatalystsFor defense contractors like RTX, a steady flow of orders for its products serves as a key revenue growth driver. To this end, it is imperative to mention that the company won several notable defense awards during the first quarter, which resulted in solid bookings of $9 billion. Consequently, RTX witnessed a solid defense backlog of $92 billion as of March 31, 2025. Such impressive backlog results make us optimistic about the revenue growth prospects of the company's defense business. This, in turn, should boost its bottom line over the long term.In line with this, the consensus estimate for RTX’s long-term (three-to-five-year) earnings growth rate is pegged at a solid 9.3%. Notably, steady defense contract flow from the Pentagon and other U.S. allies plays a key role in boosting long-term revenue and earnings growth for the majority of defense contractors. The consensus estimate for Boeing and General Dynamics’ long-term earnings growth rate is pegged at a solid 18.1% and 10%, respectively.The steadily rising global air travel acts as another key growth catalyst for RTX, with its Pratt & Whitney and Collins Aerospace units serving the commercial OEM and aftermarket industries. During the first quarter of 2025, the Collins Aerospace unit registered an 8% year-over-year improvement in its top-line performance, while sales from the Pratt & Whitney unit grew 14%. Looking ahead, robust growth in commercial aerospace, as projected by market consensus, should boost the company’s operating results. To this end, let’s take a sneak peek at RTX’s near-term earnings and sales estimates to check what they suggest.RTX’s EstimatesThe Zacks Consensus Estimate for RTX’s second-quarter 2025 revenues and earnings suggests a solid improvement of 4.8% and 2.8%, respectively, from the prior-year quarter’s level. The annual estimate figures for 2025 and 2026 also indicate a similar picture.However, the near-term earnings estimates have moved southward over the past 60 days, suggesting declining analysts’ confidence in this stock’s prospects.Image Source: Zacks Investment ResearchImage Source: Zacks Investment ResearchRisks to Take Note of Before Choosing RTXDespite the aforementioned growth opportunities, RTX continues to face significant industry challenges, including ongoing global supply-chain disruptions that have led to delays and increased costs, affecting its performance in recent years. Looking ahead, the global supply-chain issues remain a key concern for investors interested in defense stocks like BA.To this end, the International Air Transport Association (IATA) has slashed its 2025 jet delivery forecast to 1,802 units from 2,293, citing persistent supply-chain constraints, as outlined in its December 2024 outlook. As Pratt & Whitney is a major supplier of jet engines, RTX may face delayed product deliveries, potentially affecting revenues. Additionally, recent U.S. executive orders issued in February 2025 imposed new tariffs on imports, prompting retaliatory measures from China, the EU and Canada. The resultant turmoil, likely to affect global trade, may, in turn, impact defense stocks such as RTX, BA, and LMT, which have significant exposure in nations outside the United States.RTX Stock Trading at a PremiumIn terms of valuation, RTX’s forward 12-month price-to-sales (P/S) is 2.25X, a premium to its peer group’s average of 1.85X. This suggests that investors will be paying a higher price than the company's expected sales growth compared to that of its peers.Image Source: Zacks Investment ResearchHow to Play RTX Stock?To conclude, despite RTX’s technological strides like Barracuda, its premium valuation, weakening earnings outlook, and persistent supply-chain and geopolitical risks cast doubt on near-term upside. Investors may be better off avoiding the stock for now until stronger fundamentals emerge. Its VGM score of D is also not a very favorable indicator for investment. The stock currently has a Zacks Rank #4 (Sell), which further supports our thesis.   You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Higher. Faster. Sooner. Buy These Stocks NowA small number of stocks are primed for a breakout, and you have a chance to get in before they take off.At any given time, there are only 220 Zacks Rank #1 Strong Buys. On average, this list more than doubles the S&P 500. We’ve combed through the latest Strong Buys and selected 7 compelling companies likely to jump sooner and climb higher than any other stock you could buy this month.You'll learn everything you need to know about these exciting trades in our brand-new Special Report, 7 Best Stocks for the Next 30 Days.Download the report free now >>Want 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 The Boeing Company (BA): Free Stock Analysis Report General Dynamics Corporation (GD): 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