Is RTX Well-Placed to Benefit From Higher Defense Spending?

RTX Corporation RTX is drawing attention as expectations around U.S. defense spending improve. President Donald Trump has proposed a sharp increase in the U.S. defense budget, targeting annual military spending of about $1.5 trillion by 2027 compared with the roughly $901 billion defense budget approved for 2026. This proposal points to a more supportive long-term environment for defense procurement and military capacity expansion.

Such a funding increase could support sustained investments in weapons replenishment, modernization programs and advanced defense technologies. If approved, higher spending levels are likely to improve funding visibility for large, multiyear defense programs and long-term contracts.

RTX is a major supplier to the U.S. Department of Defense and allied nations. The company provides widely used systems such as Patriot air and missile defense solutions, Lower Tier Air and Missile Defense Sensor radar systems and AIM-9X Block II missiles. These programs are typically backed by long-term contracts, offering better revenue visibility as defense agencies continue modernization and restocking efforts.

A larger defense budget could expand funding for both existing and new programs where RTX serves as a prime or key contractor. These include integrated air and missile defense systems, advanced radar and sensor technologies and next-generation guided weapons.

However, defense budget proposals still need congressional approval, and higher funding usually reaches procurement over time. Even so, rising defense spending generally improves order visibility for diversified contractors like RTX.

Stocks to Keep on the Watchlist

Other defense companies that could benefit from higher U.S. defense spending are discussed below.

Lockheed Martin Corporation LMT: The company is one of the leading U.S. defense contractors, with strong exposure to missile systems, fighter aircraft and integrated air and missile defense programs. Higher defense funding could support sustained demand for platforms such as the F-35 fighter jet, missile defense interceptors, and classified space and defense initiatives.

Northrop Grumman Corporation NOC: The company has a significant presence in strategic defense programs, including missile defense, space systems and advanced aircraft platforms. Rising defense budgets could support continued investment in next-generation deterrence systems, radar and sensor technologies and other high-priority national security programs.

The Zacks Rundown for RTX

Shares of RTX have surged 62.3% in the past year compared with the industry’s 33.9% growth.

The company’s shares are trading at a discount on a relative basis, with its forward 12-month Price/Earnings being 28.73X compared with its industry’s average of 32.00X.

The Zacks Consensus Estimate for RTX’s 2026 earnings has moved south over the past 60 days.

RTX stock currently carries a Zacks Rank #4 (Sell).

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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