RTX CorporationRTXNYSE
Loading
DCF Valuation
DCF Valuation Summary
Hold
Base Case: $205.63 per share
+2.8%
Upside to Target
Bear Case
$164.02
Base Case
$205.63
Current
$200.06
Bull Case
$259.07
Weighted Average Cost of Capital (WACC)
Cost of Equity (CAPM)
Risk-Free Rate (Rf)4.50%
Beta (β)0.42
Market Risk Premium4.50%
*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)
Cost of Equity (Re)6.38%
Cost of Debt
Pre-tax Cost of Debt3.93%
Tax Rate19.05%
After-tax Cost of Debt3.18%
Equity Weight (E/V)86.75%
Debt Weight (D/V)13.25%
WACC Calculation
WACC = (E/V × Re) + (D/V × Rd × (1-Tc))
WACC = (86.75% × 6.38%) + (13.25% × 3.18%)
= 5.96%
10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)
| Year | Year 1 | Year 3 | Year 5 | Year 7 | Year 10 |
|---|---|---|---|---|---|
| Revenue | $93.5B | $106.0B | $116.0B | $127.2B | $138.8B |
| EBIT | $9.5B | $10.8B | $11.8B | $12.9B | $14.1B |
| Tax | $1.8B | $2.1B | $2.2B | $2.5B | $2.7B |
| NOPAT | $7.7B | $8.7B | $9.5B | $10.5B | $11.4B |
| + Depreciation | $4.5B | $5.1B | $5.6B | $6.1B | $6.7B |
| - Capex | $2.9B | $3.2B | $3.5B | $3.9B | $4.2B |
| - Δ NWC | $489M | $614M | $632M | $531M | $305M |
| Free Cash Flow | $8.8B | $10.0B | $10.9B | $12.2B | $13.5B |
| Discount Factor | 0.944 | 0.841 | 0.749 | 0.667 | 0.561 |
| Present Value | $8.3B | $8.4B | $8.2B | $8.1B | $7.6B |
FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital
Terminal Value Calculation
Perpetuity Growth Method
Year 10 FCF$13.5B
Terminal Growth Rate2.44%
WACC5.96%
TV = FCF₁₀ × (1+g) / (WACC-g)
Terminal Value$394.1B
PV of Terminal Value$221.0B
Exit Multiple Method
Year 10 EBITDA$20.8B
Exit Multiple (EV/EBITDA)20.4x
TV = EBITDA₁₀ × Exit Multiple
Terminal Value$422.7B
PV of Terminal Value$237.0B
Valuation Summary
Perpetuity Growth Method
PV of Projected FCFs$81.3B
PV of Terminal Value$221.0B
Enterprise Value$302.2B
(-) Net Debt$33.7B
Equity Value$268.5B
Shares Outstanding$1.3B
Price per Share$199.67
Exit Multiple Method
PV of Projected FCFs$81.3B
PV of Terminal Value$237.0B
Enterprise Value$318.2B
(-) Net Debt$33.7B
Equity Value$284.6B
Shares Outstanding$1.3B
Price per Share$211.59
Base Case Fair Value
$205.63
Average of perpetuity growth and exit multiple methods
Sensitivity AnalysisPrice per Share
| WACC ↓ / Growth → | 1.44% | 1.94% | 2.44% | 2.94% | 3.44% |
|---|---|---|---|---|---|
| 3.96% | $310.38 | $380.19 | $369.31 | $355.29 | $341.92 |
| 4.96% | $214.25 | $244.91 | $287.73 | $351.78 | $341.92 |
| 5.96% | $162.06 | $178.53 | $199.67 | $227.82 | $267.14 |
| 6.96% | $129.81 | $139.73 | $151.84 | $166.97 | $186.40 |
| 7.96% | $108.22 | $114.66 | $122.26 | $131.39 | $142.53 |
How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.
Scenario Analysis
Bear Case
$164.02
-18.0% vs current
- • -25% vs analyst consensus
- • Terminal growth: 2.0%
- • Beta: 0.52
Base Case
$205.63
2.8% vs current
- • Analyst consensus
- • Terminal growth: 2.4%
- • Beta: 0.42
Bull Case
$259.07
29.5% vs current
- • +25% vs analyst consensus
- • Terminal growth: 2.9%
- • Beta: 0.36
Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Industrials Sector
Growth Assumptions (Select Years)
Year 1 Revenue Growth5.52%
Year 3 Revenue Growth6.14%
Year 5 Revenue Growth5.76%
Year 7 Revenue Growth4.36%
Year 10 Revenue Growth2.25%
Terminal Growth Rate2.44%
Margin & Efficiency
EBIT Margin10.17%
Tax Rate19.05%
Capex / Revenue3.05%
NWC / Revenue10.00%
Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.
Institutional-Grade Methodology
Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta
Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 18x EV/EBITDA (S&P 500: 22x P/E)
This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.