Munitions Output More Than DoubledNarrow moat

RTX (RTX) — moat facet

Raytheon more than doubled its output of critical munitions in a year, and production capacity is now the barrier rivals have to cross.

For a defence contractor with a full order book, the moat is the ability to produce. Raytheon said it had "more than doubled year-over-year output across our critical munitions" through the first half of 20261, and more than doubled output of its Coyote counter-drone interceptor2.

Raytheon sales by quarter ($M)6,945Q1 20268,269Q2 2026RTX Q2 2026 earnings release; Q1 derived as first half less Q2
A step up in one quarter.

That output is what turned the backlog into sales. Raytheon's sales rose 18% in the second quarter of 2026 to $8.3 billion3, and its operating profit rose to $1,042 million, a 12.6% margin45.

Capacity is itself a barrier. A missile production line needs qualified suppliers, energetic materials, test ranges and security clearances. A rival that wins a design competition still has to build the line, which takes years; Raytheon's existing lines are already qualified.

The company is funding more. RTX invested $2,627 million in capital expenditure in 20256, of which $644 million was Raytheon's7.

Coyote is the example to follow, because it competes in counter-drone defence against newer, cheaper entrants. Doubling its output keeps Raytheon in a market where speed matters more than incumbency.

The earlier growth came from the same kind of products. In 2025 Raytheon's naval programmes added $0.7 billion of organic sales on the Evolved SeaSparrow Missile, SPY-6 radars and classified work8. A segment that can raise output across several missile families at once has a capacity advantage that is hard to see on the income statement until it shows in sales.

Output growth is the measure. If Raytheon's sales growth falls below 10% while its backlog is still rising, the factories, not the customers, will have become the limit.

Moat trajectory: Widening

Munitions and Coyote output more than doubled; sales +18% in Q2 2026.

The number that tests this moat
Reported
Raytheon sales growth, latest quarter
+18% (Q2 2026, $8.3bn)

Capacity turning into sales; below 10% with a rising backlog would mean the factories are the limit.

Source: RTX Q2 2026 earnings call transcript ↗
⚠ Threats to the moat
⚠ THREAT 01
Fixed-Price Development
Raytheon took a $0.5 billion charge in 2024 on one fixed-price development contract, the kind of deal customers increasingly demand.
References
  1. ReportedRaytheon said it had "more than doubled year-over-year output across our critical munitions" through the first half of 2026, and more than doubled output of its Coyote counter-drone interceptor.
    RTX second-quarter 2026 earnings call transcript (The Motley Fool) - Raytheon bookings and book-to-bill, GTF aircraft-on-ground and MRO output, munitions output, framework agreements, the defence budget request, GTF Advantage, Collins margin plans and segment outlook - defence: Raytheon bookings, book-to-bill and backlog, munitions output, framework agreements and the budget request. — Q2 2026 · publ. 24 July 2026 · source ↗
  2. ReportedRaytheon said it had "more than doubled year-over-year output across our critical munitions" through the first half of 2026, and more than doubled output of its Coyote counter-drone interceptor.
    RTX second-quarter 2026 earnings call transcript (The Motley Fool) - Raytheon bookings and book-to-bill, GTF aircraft-on-ground and MRO output, munitions output, framework agreements, the defence budget request, GTF Advantage, Collins margin plans and segment outlook - defence: Raytheon bookings, book-to-bill and backlog, munitions output, framework agreements and the budget request. — Q2 2026 · publ. 24 July 2026 · source ↗
  3. ReportedRaytheon's sales rose 18% in the second quarter of 2026 to $8.3 billion, and its operating profit rose to $1,042 million, a 12.6% margin.
    RTX second-quarter 2026 earnings call transcript (The Motley Fool) - Raytheon bookings and book-to-bill, GTF aircraft-on-ground and MRO output, munitions output, framework agreements, the defence budget request, GTF Advantage, Collins margin plans and segment outlook - defence: Raytheon bookings, book-to-bill and backlog, munitions output, framework agreements and the budget request. — Q2 2026 · publ. 24 July 2026 · source ↗
  4. ReportedRaytheon's sales rose 18% in the second quarter of 2026 to $8.3 billion, and its operating profit rose to $1,042 million, a 12.6% margin.
    RTX second-quarter 2026 earnings release, Form 8-K exhibit 99 - sales of $24.7 billion, segment results, cash flow, balance sheet and raised 2026 outlook. — Q2 2026 · publ. 23 July 2026 · source ↗
  5. Moat Explorer calcRaytheon's sales rose 18% in the second quarter of 2026 to $8.3 billion, and its operating profit rose to $1,042 million, a 12.6% margin.
    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.
  6. ReportedRTX invested $2,627 million in capital expenditure in 2025, of which $644 million was Raytheon's.
    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 ↗
  7. ReportedRTX invested $2,627 million in capital expenditure in 2025, of which $644 million was Raytheon's.
    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 - Raytheon: segment sales, operating profit, organic drivers, defence bookings and customer types. — FY2023-FY2025 · publ. 6 February 2026 · source ↗
  8. ReportedIn 2025 Raytheon's naval programmes added $0.7 billion of organic sales on the Evolved SeaSparrow Missile, SPY-6 radars and classified work.
    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 - Raytheon: segment sales, operating profit, organic drivers, defence bookings and customer types. — FY2023-FY2025 · publ. 6 February 2026 · source ↗
Sources
Generated September 28, 2026