Raytheon: Sole Designs the Pentagon ReordersNarrow moat

RTX (RTX) — moat facet

Raytheon sells weapons that armed forces keep reordering once chosen, but a government customer that audits costs caps the margin.

Raytheon sells products that a government, once it has chosen them, keeps buying for decades: Patriot, NASAMS, the LTAMDS radar, Standard Missile, AMRAAM, Tomahawk, Javelin, Stinger, Coyote and the SPY-6 radar1. Its moat is the design and qualification of weapons that armed forces train on, integrate and replenish.

Raytheon defence bookings ($bn)31.9202339.2202440.02025RTX Form 10-K FY2025
Bookings up a quarter in two years.

Demand is plain in the numbers. Raytheon booked $39,975 million of defence orders in 20252, and in the second quarter of 2026 it booked $19.9 billion for a book-to-bill of 2.423. Its backlog reached $86 billion in June 20264.

Sales were $28,043 million in 2025 and operating profit $3,227 million, an 11.5% margin5. The U.S. government bought $19,237 million of Raytheon's $27,892 million of external sales, about 69%67; foreign military sales through the U.S. government added $4,480 million8.

The moat is narrow rather than wide because a government customer limits the margin. It audits costs, sets profit, and has settled pricing disputes with RTX before. The upside is volume.

Demand is not unconditional. In the first quarter of 2022 RTX reversed $1.3 billion of backlog for Russia9, and China imposed sanctions on Raytheon Missiles & Defense in February 202310. A defence franchise is protected against competitors and exposed to foreign policy, which can close a market overnight.

This facet is widening, and Raytheon's rolling book-to-bill says so: 1.77 in June 202611; it would stop widening if orders fell below shipments for a full year while budgets were still rising.

Moat trajectory: Widening

Backlog $86bn; book-to-bill 1.77 rolling.

The number that tests this moat
Reported
Raytheon segment sales, full year
$28,043M (2025), 11.5% margin

The size of the defence franchise; bookings and margin together test it.

Source: RTX Form 10-K FY2025, segment results ↗
Aspects of the moat
DIG DEEPER 01
Patriot: The Allies Buy What the Army Uses
Patriot is sold as a system, and every country that owns one keeps buying interceptors, which is why Raytheon booked more than $5 billion of GEM-T in…
DIG DEEPER 02
Backlog: $52 Billion to $86 Billion
Raytheon's backlog rose from $52 billion to $86 billion in two and a half years, about three years of sales under contract.
DIG DEEPER 03
Munitions Output More Than Doubled
Raytheon more than doubled its output of critical munitions in a year, and production capacity is now the barrier rivals have to cross.
DIG DEEPER 04
Margin From 9.0% to 12.6%
Raytheon's margin has recovered from 9.0% to 12.6% on volume and Patriot mix, but a government customer caps how high it can go.
⚠ Threats to the moat
⚠ THREAT 01
Half the Backlog Is Foreign Now
Nearly half of Raytheon's backlog is now foreign, which ties its growth to export approvals and to Europe's rearmament.
⚠ THREAT 02
New Entrants With Different Business Models
RTX warns in its own filing that new defence entrants with different business models are competing, especially in cheaper, more numerous weapons.
References
  1. ReportedRaytheon sells products that a government, once it has chosen them, keeps buying for decades: Patriot, NASAMS, the LTAMDS radar, Standard Missile, AMRAAM, Tomahawk, Javelin, Stinger, Coyote and the SPY-6 radar.
    RTX Form 10-K for fiscal 2025 - Item 1 business: the three segments and their products, the GTF family powering more than 2,600 aircraft for over 90 operators, the F135 as sole-source engine on all F-35 variants, GTF Advantage certification, the IAE collaboration shares, employees (about 180,000 in 52 countries, 69% in the U.S.) and the divested businesses. — FY2025 · publ. 6 February 2026 · source ↗
  2. ReportedRaytheon booked $39,975 million of defence orders in 2025, and in the second quarter of 2026 it booked $19.9 billion for a book-to-bill of 2.42.
    RTX Form 10-K for fiscal 2025 - customers and backlog: sales to the U.S. government (38%, 40%, 46% of net sales in 2025-2023), Airbus (about 14%, 14%, 17% before discounts and incentives; 29%, 31%, 48% of Pratt & Whitney sales), Boeing and Airbus at 16% of Collins sales, international sales of 47%, and total, commercial and defence backlog with remaining performance obligations. — FY2023-FY2025 · publ. 6 February 2026 · source ↗
  3. ReportedRaytheon booked $39,975 million of defence orders in 2025, and in the second quarter of 2026 it booked $19.9 billion for a book-to-bill of 2.42.
    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. ReportedIts backlog reached $86 billion in June 2026.
    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 ↗
  5. ReportedSales were $28,043 million in 2025 and operating profit $3,227 million, an 11.5% margin.
    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. ReportedThe U.S. government bought $19,237 million of Raytheon's $27,892 million of external sales, about 69%; foreign military sales through the U.S. government added $4,480 million.
    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 ↗
  7. Moat Explorer calcThe U.S. government bought $19,237 million of Raytheon's $27,892 million of external sales, about 69%; foreign military sales through the U.S. government added $4,480 million.
    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.
  8. ReportedThe U.S. government bought $19,237 million of Raytheon's $27,892 million of external sales, about 69%; foreign military sales through the U.S. government added $4,480 million.
    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 ↗
  9. ReportedIn the first quarter of 2022 RTX reversed $1.3 billion of backlog for Russia, and China imposed sanctions on Raytheon Missiles & Defense in February 2023.
    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 ↗
  10. ReportedIn the first quarter of 2022 RTX reversed $1.3 billion of backlog for Russia, and China imposed sanctions on Raytheon Missiles & Defense in February 2023.
    RTX Form 10-K for fiscal 2023 - the three-segment recast of 2021-2022, the GTF family powering more than 1,700 aircraft for 70 operators, backlog of $196 billion, the Carrier and Otis separation and Chinese sanctions on Raytheon Missiles & Defense. — FY2023 · publ. February 2024 · source ↗
  11. ReportedThis facet is widening, and Raytheon's rolling book-to-bill says so: 1.77 in June 2026; it would stop widening if orders fell below shipments for a full year while budgets were still rising.
    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 ↗
Sources
Generated September 28, 2026