The MoatNarrow moat

RTX (RTX) — moat facet

RTX owns three installed bases that are hard to displace, but paid enough for them that its return on capital is still below its cost.

RTX has a narrow moat made of three installed bases. Pratt & Whitney's engines power more than 2,600 GTF aircraft1 and every F-352. Collins's parts are certified on aircraft from both airframers3. Raytheon's missiles and air-defence systems are the ones the U.S. and its allies train on and replenish. Each is hard to displace once installed, and each produces decades of maintenance, spares or reorders.

Segment share of RTX operating profit, 2025 (%)45.8%Collins30.0%Raytheon24.2%Pratt & WhitneyRTX Form 10-K FY2025; share of total segment operating profit, calculated
The biggest segment earns the smallest share.

The evidence is in the backlog. RTX had $289 billion of work under contract in June 2026, $170 billion commercial and $119 billion defence4, about three years of sales5. Around 45% of its remaining performance obligations were Pratt & Whitney's long-term maintenance contracts6.

The moat is narrow rather than wide because it has not produced a good return. Return on invested capital, computed from EDGAR, was 3.5% in 2021, 2.8% in 2023 and 7.1% in 20257, below an assumed 8% cost of capital every year. Half the balance sheet is goodwill and intangibles8; Pratt & Whitney earns 7.9% on its sales9; and the powder-metal recall cost $2.9 billion of operating profit in 202310.

It is widening. Operating profit rose from $3,561 million in 2023 to $9,300 million in 202511, and all three segments' margins rose in 202512.

The moat also shows in what RTX did not lose during its worst year. In 2023, with hundreds of GTF engines coming off wing, its total backlog still grew to $196 billion from $175 billion a year earlier1314, and it has risen every year since, to $268 billion at the end of 202515. Customers kept signing while the recall was being paid for.

The verdict is a set of durable positions bought at a full price. The number that would falsify it is return on invested capital: a move above 8% would make the moat worth owning, and a fall back below 5% without a one-off charge would say the positions do not earn their cost.

Moat trajectory: Widening

ROIC 2.8% (2023) to 7.1% (2025); backlog $289bn.

The number that tests this moat
Moat Explorer calc
Return on invested capital against an 8% hurdle
7.1% (2025), from 2.8% in 2023

Whether the positions earn their cost; above 8% the moat pays, below 5% it does not.

How it's calculated: NOPAT (operating income x (1 - effective tax rate)) divided by average operating invested capital (total assets less current liabilities less cash), from SEC EDGAR XBRL using the tools_roic_edgar.py method. The 8% hurdle is an assumed cost of capital.
Source: Moat Explorer ROIC calculation from EDGAR ↗
Aspects of the moat
DIG DEEPER 01
Engines Sold Now, Paid For Over Twenty-Five Years
Pratt & Whitney is RTX's biggest segment and its thinnest earner, because it is still paying for an installed base that has only begun to pay it back.
DIG DEEPER 02
Collins: Content on Almost Every Aircraft
Collins earns RTX's best margin from parts certified on almost every aircraft, but on the price paid to assemble it the return is still ordinary.
DIG DEEPER 03
Raytheon: Sole Designs the Pentagon Reorders
Raytheon sells weapons that armed forces keep reordering once chosen, but a government customer that audits costs caps the margin.
DIG DEEPER 04
A Balance Sheet Built by Acquisition
RTX owns durable franchises on an expensive balance sheet, half of it goodwill, so its return on capital is still below its cost.
References
  1. ReportedPratt & Whitney's engines power more than 2,600 GTF aircraft and every F-35.
    RTX Form 10-K for fiscal 2025 - Item 1 business: the three segments and their products, the GTF family powering more than 2,600 aircraft for over 90 operators, the F135 as sole-source engine on all F-35 variants, GTF Advantage certification, the IAE collaboration shares, employees (about 180,000 in 52 countries, 69% in the U.S.) and the divested businesses. — FY2025 · publ. 6 February 2026 · source ↗
  2. ReportedPratt & Whitney's engines power more than 2,600 GTF aircraft and every F-35.
    RTX Form 10-K for fiscal 2025 - Item 1 business: the three segments and their products, the GTF family powering more than 2,600 aircraft for over 90 operators, the F135 as sole-source engine on all F-35 variants, GTF Advantage certification, the IAE collaboration shares, employees (about 180,000 in 52 countries, 69% in the U.S.) and the divested businesses. — FY2025 · publ. 6 February 2026 · source ↗
  3. ReportedCollins's parts are certified on aircraft from both airframers.
    RTX Form 10-K for fiscal 2025 - Item 1 business: the three segments and their products, the GTF family powering more than 2,600 aircraft for over 90 operators, the F135 as sole-source engine on all F-35 variants, GTF Advantage certification, the IAE collaboration shares, employees (about 180,000 in 52 countries, 69% in the U.S.) and the divested businesses. — FY2025 · publ. 6 February 2026 · source ↗
  4. ReportedRTX had $289 billion of work under contract in June 2026, $170 billion commercial and $119 billion defence, about three years of sales.
    RTX Form 10-Q for the quarter ended 30 June 2026 - backlog of $289 billion ($170 billion commercial, $119 billion defence), remaining performance obligations, the $0.4 billion powder-metal accrual, the Blue Canyon Technologies sale, Patriot awards and the remaining repurchase authority. — Q2 2026 · publ. 23 July 2026 · source ↗
  5. Moat Explorer calcRTX had $289 billion of work under contract in June 2026, $170 billion commercial and $119 billion defence, about three years of sales.
    Moat Explorer calculation from RTX's Forms 10-K FY2023-FY2025, Form 10-Q Q2 2026 and Q2 2026 earnings call. GTF aircraft: more than 2,600 against more than 1,700, about 900 more, 2,600 / 1,700 - 1 = 53%; operators 70 to over 90. Raytheon backlog 86 / 52 - 1 = 65% (December 2023 to June 2026); 86 / 28.043 = 3.1 years of 2025 sales. Total backlog 289 / 93.5 = 3.1 years of trailing sales. Pratt & Whitney share of backlog 151 / 268 = 56% (December 2025). Commercial share of backlog 170 / 289 = 59%; defence 119 / 289 = 41% (June 2026). Defence backlog 119 / 78 - 1 = 53% (December 2023 to June 2026). Government share of 2025 net sales (33,279 + 6,702 + 6,123) / 88,603 = 46,104 / 88,603 = 52%; foreign governments 6,702 + 6,123 = 12,825, 12,825 / 88,603 = 14.5%. — 2023-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in RTX's Forms 10-K and 10-Q, earnings releases, earnings call and market data; operands shown in the source line.
  6. ReportedAround 45% of its remaining performance obligations were Pratt & Whitney's long-term maintenance contracts.
    RTX Form 10-Q for the quarter ended 30 June 2026 - backlog of $289 billion ($170 billion commercial, $119 billion defence), remaining performance obligations, the $0.4 billion powder-metal accrual, the Blue Canyon Technologies sale, Patriot awards and the remaining repurchase authority. — Q2 2026 · publ. 23 July 2026 · source ↗
  7. Moat Explorer calcReturn on invested capital, computed from EDGAR, was 3.5% in 2021, 2.8% in 2023 and 7.1% in 2025, below an assumed 8% cost of capital every year.
    Moat Explorer calculation, tools_roic_edgar.py method on SEC EDGAR XBRL for CIK 101829: return on invested capital 3.5% (2021), 4.1% (2022), 2.8% (2023), 4.9% (2024), 7.1% (2025); -1.5% in 2020. Earlier years are on United Technologies' pre-2020 basis and are not comparable. — 2020-2025 · publ. September 2026 · source ↗
    Method: NOPAT (operating income x (1 - effective tax rate)) divided by average operating invested capital (total assets less current liabilities less cash), from SEC EDGAR XBRL using the tools_roic_edgar.py method. The 8% hurdle is an assumed cost of capital.
  8. Moat Explorer calcHalf the balance sheet is goodwill and intangibles; Pratt & Whitney earns 7.9% on its sales; and the powder-metal recall cost $2.9 billion of operating profit in 2023.
    Moat Explorer calculation from RTX's Form 10-K FY2025, Q2 2026 earnings release and market data ($ millions unless stated). Goodwill plus intangibles 53,343 + 31,845 = 85,188; 85,188 / 171,079 = 49.8% of total assets; other assets 171,079 - 85,188 = 85,891. Reported against adjusted EPS 2025: 6.29 - 4.96 = 1.33, of which 1.15 acquisition accounting. Return on equity 6,732 / ((65,245 + 60,156) / 2) = 10.7%. Net debt: 37,700 + 204 - 7,435 = 30,469 (December 2025); 31,858 + 5,296 + 229 - 8,305 = 29,078 (June 2026). Net interest 1,749 / operating profit 9,300 = 18.8%. Dividends paid 3,574 / free cash flow 7,940 = 45%; free cash flow covers dividends 7,940 / 3,574 = 2.2 times. Pension items 753 + 1,182 = 1,935; 1,935 / net income 6,732 = 29%. Trailing twelve months to June 2026: revenue 88,603 + 46,784 - 41,887 = 93,500; net income 6,732 + 4,198 - 3,192 = 7,738. P/E 255.27 / 7.738 = 33.0; P/S 255.27 / 93.50 = 2.73. Year-end P/E = market value / net income and P/S = market value / revenue: 2021 128.81 / 3.864 = 33.3 and 128.81 / 64.388 = 2.00; 2022 148.36 / 5.197 = 28.5 and 2.21; 2023 120.99 / 3.195 = 37.9 and 120.99 / 68.920 = 1.76; 2024 154.03 / 4.774 = 32.3 and 1.91; 2025 245.90 / 6.732 = 36.5 and 2.78; 2020 108.60 / 56.587 = 1.92 (loss year). Revenue growth since 2023: 93.50 / 68.92 - 1 = 36%; market value 255.27 / 120.99 = 2.1 times. Share price against 52-week high 189.40 / 226.88 - 1 = -16.5%. Peers: Lockheed Martin plus General Dynamics 121.09 + 92.75 = 213.84 (below RTX's 255.27); RTX / Northrop Grumman 255.27 / 73.08 = 3.5 times. Q2 2026 operating margin 2,811 / 24,708 = 11.4%. Price over 2025 adjusted EPS 189.40 / 6.29 = 30 times. 2024 legal and termination cash 1.5 / free cash flow 4.534 = 33%. Pension sensitivity about 1.0 billion per 25 basis points, so about 4 billion per point; 4,000 / equity 65,245 = 6%. Enterprise value over trailing sales 285.82 / 93.50 = 3.1 times; price over 2026 consensus adjusted EPS 189.40 / 7.24 = 26 times. Purchase obligations after 2026 about 47 - 29 = 18 billion. Forecast extension: 2028 revenue 103.18 x 1.07 = 110.40 and EPS 7.85 x 1.084 = 8.51, extending 2027 consensus growth (not consensus). — 2020-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in RTX's Forms 10-K and 10-Q, earnings releases, earnings call and market data; operands shown in the source line.
  9. Moat Explorer calcHalf the balance sheet is goodwill and intangibles; Pratt & Whitney earns 7.9% on its sales; and the powder-metal recall cost $2.9 billion of operating profit in 2023.
    Moat Explorer calculation from RTX's segment results (Forms 10-K FY2023 and FY2025, Q2 2026 earnings release; $ millions). Operating margins: Collins 2,380 / 21,152 = 11.3% (2021), 2,816 / 23,052 = 12.2% (2022), 4,923 / 30,196 = 16.3% (2025), H1 2026 2,613 / 15,812 = 16.5%, Q2 2026 1,306 / 8,210 = 15.9%, Q1 2026 (first half less Q2) 1,307 / 7,602 = 17.2%; Pratt & Whitney 454 / 18,150 = 2.5% (2021), 1,075 / 20,530 = 5.2% (2022), 2,015 / 28,066 = 7.2% (2024), 2,596 / 32,916 = 7.9% (2025), H1 2026 1,448 / 17,062 = 8.5%, Q2 2026 738 / 8,889 = 8.3%; Raytheon 3,399 / 26,611 = 12.8% (2021), 2,448 / 25,176 = 9.7% (2022), 2,379 / 26,350 = 9.0% (2023), 3,227 / 28,043 = 11.5% (2025), Q2 2026 1,042 / 8,269 = 12.6%; Q1 2026 Raytheon sales 15,214 - 8,269 = 6,945. Growth 2021-2025: Collins 30,196 / 21,152 - 1 = 43% (about 9% a year), operating profit 4,923 / 2,380 = 2.07 times; Pratt & Whitney 32,916 / 18,150 - 1 = 81%, 2025 32,916 / 28,066 - 1 = 17%; Raytheon 28,043 / 26,611 - 1 = 5%. 2025 shares of segment sales (91,155): Pratt & Whitney 36%, Collins 33%, Raytheon 31%; of segment operating profit (10,746): Collins 4,923 = 45.8%, Raytheon 3,227 = 30.0%, Pratt & Whitney 2,596 = 24.2%. Operating profit over segment assets 2025: Collins 4,923 / 71,680 = 6.9%, Raytheon 3,227 / 44,795 = 7.2%, Pratt & Whitney 2,596 / 52,482 = 4.9%. Pratt & Whitney services share 14,449 / 32,916 = 44%; services growth 14,449 / 9,717 = 1.49 times. Collins commercial share 18,858 / 27,585 = 68%; Collins government sales 7,061 + 436 + 1,230 = 8,727, 8,727 / 27,585 = 32%. Raytheon U.S. government share 19,237 / 27,892 = 69%. Collins services share 6,118 / 27,585 = 22%. Pratt & Whitney segment assets 52,482 / 44,307 - 1 = 18%. Pratt & Whitney 2025 defence bookings other than F135: about 9.0 - 2.9 - 2.4 = 3.7 billion. GE Aerospace Commercial Engines & Services profit 8,861 against Pratt & Whitney 2,596: 3.4 times; margins 26.6% against 7.9%. — 2021-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in RTX's Forms 10-K and 10-Q, earnings releases, earnings call and market data; operands shown in the source line.
  10. ReportedHalf the balance sheet is goodwill and intangibles; Pratt & Whitney earns 7.9% on its sales; and the powder-metal recall cost $2.9 billion of operating profit in 2023.
    RTX Form 10-K for fiscal 2025 - the Powder Metal Matter: the July 2023 finding, the third-quarter 2023 charge ($5.4 billion of net sales, $2.9 billion of operating profit at Pratt & Whitney's net 51% program share, partners' 49% share), customer-compensation accruals of $1.7 billion at the end of 2024 and $0.7 billion at the end of 2025, $1.0 billion used in each of 2024 and 2025, and elevated aircraft on ground levels through the end of 2026. — FY2023-FY2025 · publ. 6 February 2026 · source ↗
  11. ReportedOperating profit rose from $3,561 million in 2023 to $9,300 million in 2025, and all three segments' margins rose in 2025.
    RTX Form 10-K for fiscal 2025 - consolidated financial statements and notes: income statement, cash flow, dividends and repurchases, long-term debt of $37,700 million, goodwill by segment, pension income, the 2024 resolution of certain legal matters, the Raytheon contract termination and the accelerated share repurchase. — FY2023-FY2025 · publ. 6 February 2026 · source ↗
  12. ReportedOperating profit rose from $3,561 million in 2023 to $9,300 million in 2025, and all three segments' margins rose in 2025.
    RTX Form 10-K for fiscal 2025 - Item 7 segment review and Note 20: net sales and operating profit by segment for 2023-2025, organic sales drivers (commercial aftermarket, OEM, military), sales by customer type, products and services, segment assets, capital expenditure and research and development - totals across segments: segment sales and profit, eliminations, acquisition accounting and FAS/CAS adjustments. — FY2023-FY2025 · publ. 6 February 2026 · source ↗
  13. ReportedIn 2023, with hundreds of GTF engines coming off wing, its total backlog still grew to $196 billion from $175 billion a year earlier, and it has risen every year since, to $268 billion at the end of 2025.
    RTX Form 10-K for fiscal 2024 - segment results for 2022-2024, backlog of $218 billion and the powder-metal customer-compensation accrual. — FY2024 · publ. February 2025 · source ↗
  14. ReportedIn 2023, with hundreds of GTF engines coming off wing, its total backlog still grew to $196 billion from $175 billion a year earlier, and it has risen every year since, to $268 billion at the end of 2025.
    RTX Form 10-K for fiscal 2022 - the Raytheon merger (2.3348 UTC shares per Raytheon share), 2020 results on the old four-segment basis, and backlog history. — FY2022 · publ. February 2023 · source ↗
  15. ReportedIn 2023, with hundreds of GTF engines coming off wing, its total backlog still grew to $196 billion from $175 billion a year earlier, and it has risen every year since, to $268 billion at the end of 2025.
    RTX Form 10-K for fiscal 2025 - customers and backlog: sales to the U.S. government (38%, 40%, 46% of net sales in 2025-2023), Airbus (about 14%, 14%, 17% before discounts and incentives; 29%, 31%, 48% of Pratt & Whitney sales), Boeing and Airbus at 16% of Collins sales, international sales of 47%, and total, commercial and defence backlog with remaining performance obligations. — FY2023-FY2025 · publ. 6 February 2026 · source ↗
Sources
Generated September 28, 2026