A Balance Sheet Built by AcquisitionThin moat

RTX (RTX) — moat facet

RTX owns durable franchises on an expensive balance sheet, half of it goodwill, so its return on capital is still below its cost.

RTX's three businesses are durable; the capital behind them is expensive. The company is the product of United Technologies' acquisitions and its 2020 merger with Raytheon Company1, and it carries the result: goodwill and intangibles of $85,188 million, 49.8% of its assets23, and long-term debt of $37,700 million4.

RTX operating profit ($M)5,13620215,50420223,56120236,53820249,3002025RTX Forms 10-K FY2023 and FY2025
Profit growing into the purchase price.

Measured on that capital, the franchises earn an ordinary return. Return on invested capital, computed from EDGAR, was 7.1% in 2025, up from 2.8% in 20235. That is below an assumed 8% cost of capital. RTX's operating profit of $9,300 million6 is real; it is simply small against what was paid.

This facet also contains the cushions. Pension items added about $1.9 billion to 2025 profit7. Dividends took $3,574 million in 20258 and were raised again in 20269, and free cash flow of $7,940 million10 covered them about twice11.

The capital structure is a limit on the moat rather than part of it. It does not stop a rival; it reduces what the moat is worth to shareholders.

The tax line has also moved. RTX's effective tax rate was 11.9% in 2023 and 19.1% in both 2024 and 202512, so 2023's depressed earnings were cushioned by a low rate that has since normalised. Net interest expense was $1,505 million in 2023, $1,862 million in 2024 and $1,749 million in 202513, the first decline in the three years shown.

This facet is thin and slowly widening, because profit is growing into the purchase price. Return on invested capital settles it: above 8% the acquisitions are finally earning their cost, and a fall back below 5% would mean they never will.

Moat trajectory: Widening

ROIC 2.8% (2023) to 7.1% (2025).

The number that tests this moat
Moat Explorer calc
Net debt, latest quarter
About $29.1bn (June 2026), from $30.5bn at end 2025

The leverage behind the franchises; falling while returns rise is the healthy combination.

How it's calculated: Long-term debt ($31,858M) plus current portion of long-term debt ($5,296M) plus short-term borrowings ($229M) less cash ($8,305M) at 30 June 2026, from the Q2 2026 earnings release balance sheet.
Source: Moat Explorer calculation: RTX valuation and balance sheet ↗
Aspects of the moat
DIG DEEPER 01
Goodwill and Intangibles: Half the Balance Sheet
Half of RTX's balance sheet is goodwill and intangibles, so its durable franchises earn an ordinary return on the price paid for them.
DIG DEEPER 02
Return on Capital: 2.8% to 7.1%
RTX's return on invested capital has risen from 2.8% to 7.1% since 2023, but it has not yet cleared an 8% cost of capital in any year since the…
DIG DEEPER 03
The $10 Billion Buyback, and Then Nothing
RTX bought back $12.9 billion of stock in 2023 at the recall's low and almost nothing since, letting debt fall instead.
DIG DEEPER 04
Pension Income That Is Not Operating
About $1.9 billion of RTX's 2025 profit came from two pension lines, one of which is shrinking every year.
⚠ Threats to the moat
⚠ THREAT 01
The Comparable History Is Five Years Long
RTX in its present shape has only five comparable years of results, all but one of them in a favourable market.
⚠ THREAT 02
Scale Did Not Prevent the Recall
RTX's scale did not stop a flaw in one powder from reaching hundreds of engines and costing $2.9 billion of profit.
References
  1. ReportedThe company is the product of United Technologies' acquisitions and its 2020 merger with Raytheon Company, and it carries the result: goodwill and intangibles of $85,188 million, 49.8% of its assets, and long-term debt of $37,700 million.
    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 ↗
  2. ReportedThe company is the product of United Technologies' acquisitions and its 2020 merger with Raytheon Company, and it carries the result: goodwill and intangibles of $85,188 million, 49.8% of its assets, and long-term debt of $37,700 million.
    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 ↗
  3. Moat Explorer calcThe company is the product of United Technologies' acquisitions and its 2020 merger with Raytheon Company, and it carries the result: goodwill and intangibles of $85,188 million, 49.8% of its assets, and long-term debt of $37,700 million.
    Moat Explorer calculation from RTX's Form 10-K FY2025, Q2 2026 earnings release and market data ($ 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.
  4. ReportedThe company is the product of United Technologies' acquisitions and its 2020 merger with Raytheon Company, and it carries the result: goodwill and intangibles of $85,188 million, 49.8% of its assets, and long-term debt of $37,700 million.
    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 ↗
  5. Moat Explorer calcReturn on invested capital, computed from EDGAR, was 7.1% in 2025, up from 2.8% in 2023.
    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.
  6. ReportedRTX's operating profit of $9,300 million is real; it is simply small against what was paid.
    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. Moat Explorer calcPension items added about $1.9 billion to 2025 profit.
    Moat Explorer calculation from RTX's Form 10-K FY2025, Q2 2026 earnings release and market data ($ 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.
  8. ReportedDividends took $3,574 million in 2025 and were raised again in 2026, and free cash flow of $7,940 million covered them about twice.
    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 ↗
  9. ReportedDividends took $3,574 million in 2025 and were raised again in 2026, and free cash flow of $7,940 million covered them about twice.
    RTX dividend history - quarterly dividend of $0.730 from May 2026, $0.680 in February 2026. — 2026 · publ. September 2026 · source ↗
  10. ReportedDividends took $3,574 million in 2025 and were raised again in 2026, and free cash flow of $7,940 million covered them about twice.
    RTX fourth-quarter and full-year 2025 earnings release, Form 8-K exhibit 99 - adjusted EPS of $6.29, free cash flow of $7,940 million, adjusted segment results and the January 2026 outlook. — FY2025 · publ. 27 January 2026 · source ↗
  11. Moat Explorer calcDividends took $3,574 million in 2025 and were raised again in 2026, and free cash flow of $7,940 million covered them about twice.
    Moat Explorer calculation from RTX's Form 10-K FY2025, Q2 2026 earnings release and market data ($ 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.
  12. ReportedRTX's effective tax rate was 11.9% in 2023 and 19.1% in both 2024 and 2025, so 2023's depressed earnings were cushioned by a low rate that has since normalised.
    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 ↗
  13. ReportedNet interest expense was $1,505 million in 2023, $1,862 million in 2024 and $1,749 million in 2025, the first decline in the three years shown.
    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 ↗
Sources
Generated September 28, 2026