RTX's Commercial Aftermarket Liftoff: Can It Overcome Tariff Gravity?

RTX Corporation’s (RTX) commercial aerospace aftermarket segment has proved to be a key performance driver for the company in recent quarters, thanks to steadily growing air traffic necessitating increased usage of aftermarket parts and services. Indeed, the rising number of airline passengers in the post-pandemic era has been fueling demand for aircraft maintenance and repair services, especially as airlines continue to operate older fleets due to new aircraft production delays.

As a result, the robust aftermarket activity in commercial aerospace helped RTX achieve a solid 9% year-over-year organic sales increase in its last reported quarter, partially driven by double-digit growth witnessed in its commercial aftermarket sales. For the first quarter of 2025, the company registered a similar robust growth of 21% in its commercial aftermarket sales.

With global air passenger traffic expected to grow 5.8% year over year in 2025, as predicted by the International Air Transport Association (“IATA”) in its June 2025 outlook, we expect RTX’s commercial aftermarket sales to continue to show stable growth trends in the coming quarters.

However, the recently heightened import tariffs by the U.S. government, particularly on steel and aluminum, can be expected to pose a risk and even curb the extent of the liftoff in its commercial aftermarket business. In particular, these tariffs, expected to result in a plausible upward cost pressure on aftermarket parts manufacturing, prompted RTX to revise its 2025 profit forecast downward. The company now projects its adjusted earnings per share to be in the $5.80-$5.95 range, down from the previous guidance.

Nevertheless, RTX’s outsized growth in the commercial aftermarket should continue to offer it a solid buffer and strong incentive for long-term investors, provided it can successfully navigate industry headwinds and sustain operational momentum.

Other Stocks to Get the Tariff Heat

RTX apart, other aerospace stocks, such as Boeing (BA) and Lockheed Martin (LMT), which serve the commercial aftermarket industry, remain vulnerable to tariff impacts and may bear the brunt of the resulting cost pressure.

Notably, Boeing Global Services (“BGS”) unit’s parts distribution network provides access to more than 15 million parts worldwide. The company offers a variety of maintenance, repair, and overhaul (“MRO”) services, as well as airplane storage services, at several locations worldwide, including China, Ireland, the UK, and the United States.

On the other hand, Lockheed Martin’s Derco has been providing maintenance, fleet management, upgrades, and a wide range of aircraft spares and components to commercial customers worldwide since 1979. Some of the commercial aircraft platforms that Derco serves include Boeing 747, 777, Airbus A320 and A340.

The Zacks Rundown for RTX

Shares of RTX have surged 30.6% in the past year compared with the industry’s growth of 14.7%.

From a valuation standpoint, RTX is currently trading at a forward 12-month earnings of 24.70X, a discount when stacked up with the industry average of 28.04X.

The Zacks Consensus Estimate for RTX’s near-term earnings has moved south over the past 60 days.

RTX stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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