RTX Corporation has just won a $946.4 million contract from the US Army for the Patriot missile system hardware, software, and services. The company is a major contractor when it comes to the army’s Patriot missile system and it doesn’t come as a surprise that it was awarded the nearly one billion dollar contract.
RTX Corporation, formerly known as Raytheon Technologies Corporation, is a leader in the aerospace and defense industries, providing advanced systems and services for commercial and military clients.
The company’s operations are divided into four main segments. First, Collins Aerospace is in charge of manufacturing electrical and mechanical systems for aircraft, including nacelles and thrust reverser systems, landing systems, power management systems, and propeller systems. This division generates approximately 29% of the company’s total revenue. Second, its Pratt & Whitney segment designs and produces aircraft engines for commercial and military applications, including those used in the Airbus A320neo and Embraer E-Jets, as well as all the variants of the F-35 Lightning II Joint Strike Fighter. This segment contributes about 29% of total revenue.
Third, the Raytheon Missiles & Defense segment develops missile systems and integrated defense solutions, and adds 21% of total revenue. Finally, Raytheon Intelligence & Space provides radars and sensors for the aerospace industry and contributes 20% of total revenue.
From a geographic point of view, the U.S. accounts for approximately 82% of total revenue. The United States government is the largest client, accounting for roughly 46% of RTX’s revenue. Other important clients are NASA, General Dynamics, Boeing, Lockheed Martin, and Airbus.
The company’s recent contract announcement with the US Army pertains to modifications of the components of the Patriot missile system at the RTX manufacturing facility in Andover, Massachusetts. The contract is set to expire at the end of 2029, giving the company a consistent source of revenue for the next 5 years.
The deal also shows that RTX continues to be an integral part of the US defense system. We covered previously how innovative AI companies were disrupting the way defense lobbying is done. RTX has proven that it is still too early to discount a company so engrained in the country’s defense system. RTX bulls would, however, need to be cautious as winning contracts for modification of existing infrastructure is only so relevant in the context of today’s AI developments. The country’s defense system needs to move quickly to integrate AI technologies and companies like RTX will have to move quickly to fill that gap. Unless they find a way to beat companies working purely in AI defense capabilities, there is a serious threat to their future revenues.
RTX is not on our latest list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 72 hedge fund portfolios held RTX at the end of the third quarter which was 54 in the previous quarter. While we acknowledge the potential of RTX as a leading investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as RTX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
