RTX
RTX Corporation
$177.01
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 52.6% above fair value
You pay
$177.01
Bear
$91.59
Fair
$116.01
Bull
$140.45
Bear
$91.59
-48.3%
$4.20 × 18x + net cash
Fair
$116.01
-34.5%
$4.20 × 22x + net cash
Bull
$140.45
-20.7%
$4.20 × 26x + net cash
Key Value Driver
Through-cycle normalized EPS ($4.20)
Implied Market Multiple
42.2x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $224.89 from 26 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $116.01 per share.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Wall Street's average price target is $224.89 (from 26 analysts). Our estimate is 65% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing