Goodwill and Intangibles: Half the Balance SheetThin moat

RTX (RTX) — moat facet

Half of RTX's balance sheet is goodwill and intangibles, so its durable franchises earn an ordinary return on the price paid for them.

RTX's largest asset is the price of its acquisitions. At the end of 2025 it carried goodwill of $53,343 million and intangible assets of $31,845 million, together $85,188 million of total assets of $171,079 million1, or 49.8%2.

RTX total assets, end of 2025Goodwill — 31%Intangible assets — 19%All other assets — 50%RTX Form 10-K FY2025 ($M)
Half the balance sheet is purchase price.

That is the history of United Technologies: the purchase of Rockwell Collins in November 20183 and the merger with Raytheon Company, which converted each Raytheon share into 2.3348 shares of the old United Technologies4. The businesses bought are good ones. The prices paid were full.

The consequence is an accounting charge that has nothing to do with operations. Acquisition accounting adjustments reduced operating profit by $2,005 million in 20255, and they account for $1.15 of the $1.33 gap between RTX's reported earnings per share of $4.96 and its adjusted $6.2967.

Investors who look at adjusted earnings ignore the charge. Investors who look at return on capital cannot, because the capital was spent.

The intangible assets are being used up; the goodwill is not. Intangibles are amortized, which is the $2,005 million of acquisition accounting adjustments in 20258, while goodwill stays on the balance sheet until it is impaired. Over time, the intangible part shrinks and the goodwill part becomes a larger share of what remains.

This is why a company with durable franchises earns a return on invested capital of 7.1%9. The ratio moves up only as profit grows into the purchase price. Watch the goodwill share of assets; a fall toward 40% through profit growth rather than write-downs would mean the acquisitions are being earned.

Moat trajectory: Holding steady

Goodwill and intangibles 49.8% of assets.

The number that tests this moat
Moat Explorer calc
Goodwill and intangibles as a share of total assets
49.8% (end 2025: $85,188M of $171,079M)

How much of RTX is purchase price; a fall through profit growth would mean the deals are being earned.

How it's calculated: Goodwill ($53,343M) plus intangible assets ($31,845M) divided by total assets ($171,079M) at 31 December 2025, from the FY2025 10-K.
Source: Moat Explorer calculation: RTX valuation and balance sheet ↗
⚠ Threats to the moat
⚠ THREAT 01
Two Billion Dollars a Year of Amortization
RTX's acquisitions cost it about $2 billion of reported operating profit every year, which its adjusted earnings leave out.
References
  1. ReportedAt the end of 2025 it carried goodwill of $53,343 million and intangible assets of $31,845 million, together $85,188 million of total assets of $171,079 million, or 49.8%.
    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 ↗
  2. Moat Explorer calcAt the end of 2025 it carried goodwill of $53,343 million and intangible assets of $31,845 million, together $85,188 million of total assets of $171,079 million, or 49.8%.
    Moat Explorer calculation from RTX's Form 10-K FY2025, Q2 2026 earnings release and market data ($ 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.
  3. ReportedThat is the history of United Technologies: the purchase of Rockwell Collins in November 2018 and the merger with Raytheon Company, which converted each Raytheon share into 2.3348 shares of the old United Technologies.
    RTX Form 10-K for fiscal 2020 - continuing-operations results for 2018-2020 and the $3,183 million goodwill impairment. — FY2020 · publ. February 2021 · source ↗
  4. ReportedThat is the history of United Technologies: the purchase of Rockwell Collins in November 2018 and the merger with Raytheon Company, which converted each Raytheon share into 2.3348 shares of the old United Technologies.
    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 ↗
  5. ReportedAcquisition accounting adjustments reduced operating profit by $2,005 million in 2025, and they account for $1.15 of the $1.33 gap between RTX's reported earnings per share of $4.96 and its adjusted $6.29.
    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 ↗
  6. ReportedAcquisition accounting adjustments reduced operating profit by $2,005 million in 2025, and they account for $1.15 of the $1.33 gap between RTX's reported earnings per share of $4.96 and its adjusted $6.29.
    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 ↗
  7. Moat Explorer calcAcquisition accounting adjustments reduced operating profit by $2,005 million in 2025, and they account for $1.15 of the $1.33 gap between RTX's reported earnings per share of $4.96 and its adjusted $6.29.
    Moat Explorer calculation from RTX's Form 10-K FY2025, Q2 2026 earnings release and market data ($ 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. ReportedIntangibles are amortized, which is the $2,005 million of acquisition accounting adjustments in 2025, while goodwill stays on the balance sheet until it is impaired.
    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 ↗
  9. Moat Explorer calcThis is why a company with durable franchises earns a return on invested capital of 7.1%.
    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.
Sources
Generated September 28, 2026