RTX vs. General Dynamics: Which Defense Stock Offers More Upside?

By Aparajita Dutta | September 24, 2025, 10:47 AM

Increasing defense spending by the United States and its allied nations, amid intensifying geopolitical hostilities worldwide, has been boosting demand for the research, development, and procurement of cutting-edge military technology. This demand trend is driving the growth prospects of major defense primes, RTX Corp. (RTX) and General Dynamics (GD), which benefit from multi-billion-dollar contracts for their combat-proven missile, radars, ships, and other crucial weaponries. Additionally, their exposure to the commercial aerospace industry provides diversified growth and revenue stability.

Notably, RTX offers a diversified portfolio with products ranging from commercial and military jet engines and aerostructures to advanced missiles, sensors, radars and interceptors. On the other hand, General Dynamics, widely known for its naval shipbuilding expertise, manufactures business jets and munitions as well as wheeled and tracked combat vehicles.

Looking ahead, global defense investment is poised to surge over the next few years amid escalating geopolitical tensions and cross-border as well as intra-country conflicts. NATO members’ recent commitment to raise defense spending to 5% of GDP further underscores this trend.

Against this backdrop, investors seeking exposure to high-growth industries will consider defense stocks like RTX and GD, prompting questions on which offers better prospects. To support this assertion, let us conduct a thorough comparative analysis of both stocks’ financial prowess, growth drivers, and risks (if any) associated with investing in them.

Financial Stability & Growth Drivers: RTX vs GD

As of the second quarter of 2025, RTX held cash and cash equivalents worth $4.78 billion, with a current debt value of $3.72 billion remaining well below its cash reserve. This reflects a solid liquidity position for the stock. Additionally, RTX’s current ratio of 1.01 (as of June 30, 2025), which exceeds 1, indicates that it has sufficient capital to settle its short-term debt obligations.

RTX's solid financial position and robust cash flow of $1.76 billion from operating activities enable it to make shareholder-friendly decisions. Notably, RTX repurchased shares worth $50 million and paid dividends worth $1.75 billion in the first six months of 2025.

In contrast, General Dynamics’ cash and cash equivalents at the end of the second quarter of 2025 totaled $1.52 billion. As of June 29, 2025, its long-term debt amounted to $7.51 billion, while its current debt was $1.20 billion. Therefore, it is safe to conclude that General Dynamics holds a strong liquidity position, similar to RTX. Further, its cash flow from operations improved a solid 170.5% year over year during the first six months of 2025, which enabled it to repurchase 2.4 million of shares and pay dividends worth $785 million.

As far as growth catalysts are concerned, both RTX and GD stand to gain from the expanding U.S. defense budget, with the White House proposing a 13% increase to $1.01 trillion for fiscal 2026. The proposal prioritized U.S. space dominance, allocating $40 billion for the Space Force, a 30% rise from 2025, and $25 billion for the next-generation missile defense system, Golden Dome, along with $2.5 billion for missile production expansion.

These initiatives favor RTX’s strengths in missile and space-based defense technologies. Meanwhile, the budget proposal called for expanding shipbuilding capacity with 19 new Navy battle force ships, benefiting General Dynamics, given its leadership in naval ship construction. This robust defense funding, driven by geopolitical tensions, lays a foundation for growth across both primes' core military and technological domains.

For both RTX and GE, a steadily improving commercial air traffic acts as another common growth tailwind. Notably, RTX’s second-quarter 2025 results reflected solid organic year-over-year sales growth of 9%. A major portion of this improvement was driven by double-digit growth witnessed in the company’s commercial aftermarket sales, along with a high-single-digit increase in commercial OEM sales.

On the other hand, GD’s Aerospace segment witnessed 4.1% year-over-year growth in the second quarter, on account of increased customer demand for aircraft maintenance. With the International Air Transport Association (“IATA”) projecting 5.8% year-over-year growth in passenger traffic in 2025, both GD and RTX remain well-positioned to capitalize on strengthening commercial aviation trends.

Risks of Investing in RTX vs GD

The commercial aerospace industry, which RTX shares exposure to with General Dynamics, has experienced more severe constraints from supply-chain vulnerabilities compared to defense in recent times that benefits from steadier government support. To this end, IATA stated in its June 2025 report that airlines are short approximately 5,400 aircraft due to delivery delays. With global aircraft production averaging 2,000 units per year, clearing this backlog may take three to five years, which, in turn, might extend delays in revenue realization for engine sales and amplify production pressures for RTX and GD.

Both RTX and GD face other common industry issues, like labor challenges. As per the 2025 Workforce Study report released by the Aerospace Industries Association (“AIA”), in collaboration with McKinsey, the attrition rate of the aerospace-defense industry dropped from a peak of 17% in 2022 to approximately 14.5% in 2024, which is much higher than the average of other U.S. industries, which range between 2.5% and 7%. High attrition risks production delays and quality issues by reducing experienced workforce availability. These persistent labor shortages could impact the on-time delivery of finished products for both companies, potentially affecting their operating results.

How Do Zacks Estimates Compare for RTX & GD?

The Zacks Consensus Estimate for RTX’s 2025 sales and earnings per share (EPS) implies an improvement of 6.1% and 3.5%, respectively, from the year-ago quarter’s reported figures. However, RTX’s EPS estimates have moved south over the past 60 days.