RTX Q2 Free Cash Flow Jumps to $2.88 Billion Amid Engine Demand

RTX Corporation (NYSE: RTX) reported second-quarter free cash flow of $2.88 billion, a sharp increase from negative $72 million in the same period last year, as strong demand for aircraft parts and repairs drove segment performance. The company’s Pratt & Whitney division posted 16% sales growth to $8.89 billion, with adjusted profit rising 22% and an operating margin of 8.3%. Collins Aerospace contributed to the results with 8% sales growth and a 16.7% operating margin.

The cash flow improvement extends to the broader first half, where RTX generated $4.18 billion, up from $720 million a year ago. This financial resilience supports the company’s dividend strategy, with the quarterly payout increasing from $0.63 to $0.73 per share, resulting in an annual rate of $2.92 per share. The current dividend yield stands at approximately 1.56%.

Following its third-quarter results on October 20, RTX raised its 2026 adjusted sales guidance to a range of $97 billion to $97.5 billion. The company also adjusted its earnings per share outlook to $7.65 to $7.75, with organic sales growth expected between 10% and 11%. To support ongoing demand, Pratt & Whitney announced a $25 million investment plan to expand manufacturing operations in Poland.

Despite these operational gains, the stock has pulled back about 37% from all-time highs, though it has outperformed the S&P 500 aerospace and defense sector, which is down 9% for the year. The relative strength reflects investor confidence in aftermarket services, but valuation concerns persist. RTX trades at a price-to-earnings multiple of 33x, well above the sector median of 20x, and a price-to-sales ratio of 2.78x compared to the sector average of 1.77x.

The company holds an order backlog exceeding $200 billion, providing visibility into future demand. Institutional positioning remains constructive, although the count of hedge fund holders fell slightly in Q2 compared to Q1. Fisher Asset Management added to its position by 3%, reaching $4.34 million, while Point72 Asset Management expanded its holding by 62% to $625.75 million. Short interest remains low at 1.01%, despite shares held short rising to 13.65 million as of September 30 from 12.34 million on August 31.