In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to the firm (FCFF) is generally described as cash flows after direct costs and before any payments to capital suppliers.

Intrinsic Stock Value (Valuation Summary)
Weighted Average Cost of Capital (WACC)
FCFF Growth Rate (g)

RTX Corp., free cash flow to the firm (FCFF) forecast

US$ in millions, except per share data

Year	Value	FCFF_t or Terminal value (TV_t)	Calculation	Present value at 9.32%
0¹	FCFF₀	9,443
1	FCFF₁	9,572	= 9,443 × (1 + 1.37%)	8,756
2	FCFF₂	9,820	= 9,572 × (1 + 2.59%)	8,217
3	FCFF₃	10,193	= 9,820 × (1 + 3.81%)	7,802
4	FCFF₄	10,706	= 10,193 × (1 + 5.02%)	7,496
5	FCFF₅	11,374	= 10,706 × (1 + 6.24%)	7,285
5	Terminal value (TV₅)	392,749	= 11,374 × (1 + 6.24%) ÷ (9.32% – 6.24%)	251,539
Intrinsic value of RTX Corp. capital				291,094
Less: Debt (fair value)				36,010
Intrinsic value of RTX Corp. common stock				255,084

Intrinsic value of RTX Corp. common stock (per share)				$189.27
Current share price				$215.22

Based on: 10-K (reporting date: 2025-12-31).

¹ See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

RTX Corp., cost of capital

	Value¹	Weight	Required rate of return²	Calculation
Equity (fair value)	290,065	0.89	10.01%
Debt (fair value)	36,010	0.11	3.80%	= 4.50% × (1 – 15.52%)

Based on: 10-K (reporting date: 2025-12-31).

¹ US$ in millions

Equity (fair value) = No. shares of common stock outstanding × Current share price
= 1,347,758,144 × $215.22
= $290,064,507,751.68

Debt (fair value). See details »

² Required rate of return on equity is estimated by using CAPM. See details »

Required rate of return on debt. See details »

Required rate of return on debt is after tax.

Estimated (average) effective income tax rate
= (19.10% + 19.10% + 11.90% + 11.60% + 15.90%) ÷ 5
= 15.52%

WACC = 9.32%

FCFF growth rate (g) implied by PRAT model

RTX Corp., PRAT model

	Average	Dec 31, 2025	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021
Selected Financial Data (US$ in millions)
Interest expense		1,835)	1,970)	1,653)	1,300)	1,330)
Loss from discontinued operations		—)	—)	—)	(19)	(33)
Net income attributable to common shareowners		6,732)	4,774)	3,195)	5,197)	3,864)

Effective income tax rate (EITR)¹		19.10%	19.10%	11.90%	11.60%	15.90%

Interest expense, after tax²		1,485)	1,594)	1,456)	1,149)	1,119)
Add: Dividends on common stock		3,419)	3,217)	3,239)	3,128)	2,957)
Interest expense (after tax) and dividends		4,904)	4,811)	4,695)	4,277)	4,076)

EBIT(1 – EITR)³		8,217)	6,368)	4,651)	6,365)	5,016)

Short-term borrowings		204)	183)	189)	625)	134)
Long-term debt currently due		3,412)	2,352)	1,283)	595)	24)
Long-term debt, excluding currently due		34,288)	38,726)	42,355)	30,694)	31,327)
Shareowners’ equity		65,245)	60,156)	59,798)	72,632)	73,068)
Total capital		103,149)	101,417)	103,625)	104,546)	104,553)
Financial Ratios
Retention rate (RR)⁴		0.40	0.24	-0.01	0.33	0.19
Return on invested capital (ROIC)⁵		7.97%	6.28%	4.49%	6.09%	4.80%
Averages
RR	0.23
ROIC	5.92%

FCFF growth rate (g)⁶	1.37%

Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).

¹ See details »

2025 Calculations

² Interest expense, after tax = Interest expense × (1 – EITR)
= 1,835 × (1 – 19.10%)
= 1,485

³ EBIT(1 – EITR) = Net income attributable to common shareowners – Loss from discontinued operations + Interest expense, after tax
= 6,732 – 0 + 1,485
= 8,217

⁴ RR = [EBIT(1 – EITR) – Interest expense (after tax) and dividends] ÷ EBIT(1 – EITR)
= [8,217 – 4,904] ÷ 8,217
= 0.40

⁵ ROIC = 100 × EBIT(1 – EITR) ÷ Total capital
= 100 × 8,217 ÷ 103,149
= 7.97%

⁶ g = RR × ROIC
= 0.23 × 5.92%
= 1.37%

FCFF growth rate (g) implied by single-stage model

g = 100 × (Total capital, fair value₀ × WACC – FCFF₀) ÷ (Total capital, fair value₀ + FCFF₀)
= 100 × (326,075 × 9.32% – 9,443) ÷ (326,075 + 9,443)
= 6.24%

where:

Total capital, fair value₀ = current fair value of RTX Corp. debt and equity (US$ in millions)
FCFF₀ = the last year RTX Corp. free cash flow to the firm (US$ in millions)
WACC = weighted average cost of RTX Corp. capital

FCFF growth rate (g) forecast

RTX Corp., H-model

Year	Value	g_t
1	g₁	1.37%
2	g₂	2.59%
3	g₃	3.81%
4	g₄	5.02%
5 and thereafter	g₅	6.24%

where:
g₁ is implied by PRAT model
g₅ is implied by single-stage model
g₂, g₃ and g₄ are calculated using linear interpolation between g₁ and g₅

Calculations

g₂ = g₁ + (g₅ – g₁) × (2 – 1) ÷ (5 – 1)
= 1.37% + (6.24% – 1.37%) × (2 – 1) ÷ (5 – 1)
= 2.59%

g₃ = g₁ + (g₅ – g₁) × (3 – 1) ÷ (5 – 1)
= 1.37% + (6.24% – 1.37%) × (3 – 1) ÷ (5 – 1)
= 3.81%

g₄ = g₁ + (g₅ – g₁) × (4 – 1) ÷ (5 – 1)
= 1.37% + (6.24% – 1.37%) × (4 – 1) ÷ (5 – 1)
= 5.02%

RTX Corp. (NYSE:RTX)

Present Value of Free Cash Flow to the Firm (FCFF)

Intrinsic Stock Value (Valuation Summary)

Weighted Average Cost of Capital (WACC)

FCFF Growth Rate (g)

FCFF growth rate (g) implied by PRAT model

FCFF growth rate (g) implied by single-stage model

FCFF growth rate (g) forecast