RTX Corporation (RTX) Operational Quality Rating (A) | 2025 Old York Registry
Industrials | Aerospace & Defense
By: Old York Financial
A Private Principal Report
the verdict
Old York Financial has assigned RTX Corporation (RTX) an Operational Quality (A) Rating.
RTX is a unique "hybrid" asset. It possesses Monopoly Characteristics in narrowbody engines (GTF) and missile defense (Patriot). 2025 was a recovery year where RTX successfully navigated the "powder metal" crisis that dogged 2024. It earns an (A) because it has the most diversified cash flow in the sector, but it stays out of (AA) territory due to a lower ROIC (7.8%) and a higher debt load compared to pure-play peers. It is a massive "distribution engine" that is currently pivoting from crisis management to steady capital return.
the old york analysis
owner earnings: the mro cash machine
RTX’s "Owner Earnings" are driven by the commercial aftermarket. They sell engines at a loss to collect a 30-year "toll" on every flight hour.
2025 Total Revenue: $88.6 Billion (Up 10% YoY)
2025 Net Cash from Operations: $10.6 Billion
(-) Maintenance CapEx: ($2.6 Billion)
(+) Depreciation & Amortization: ~ $4.4 Billion
OLD YORK OWNER EARNINGS: $12.4 Billion
Analyst Note: Free Cash Flow exploded to $7.9B in 2025 (up $3.4B YoY). The "Owner Earnings" are significantly higher than reported net income because of the heavy front-loaded depreciation on engine programs.
the equity retraction (share retirement)
The Retirement Factor: RTX is a massive share subtractor but hit a "policy pause" in late 2025.
2025 Performance: After completing a massive $10B accelerated repurchase program in the prior cycle, 2025 saw a pivot. They returned roughly $3.7B in dividends, but buybacks were throttled to $50M in the first 9 months as they focused on debt reduction and navigating new executive orders on defense contractor distributions.
The Verdict: While the intent to subtract equity remains, the velocity slowed in 2025
operational efficiency
ROIC: 7.8% (The clear weak point; well below the 15% Yardstick floor).
Net Profit Margin: 7.6% (Improved from 5.9% in 2024).
Operating Margin: 10.5% (Segment margins are higher, but corporate overhead and interest on $30B+ debt create a drag).
EPS Growth (1-Year): 40.2% (A massive rebound as they moved past one-time charges related to engine recalls).
the fortress check
The Backlog: $268 Billion (The largest in the history of the Registry).
Commercial vs. Defense: $161B Commercial / $107B Defense. This balance makes them the most "Anti-Fragile" of the Big 4 defense primes.
Liquidity: Ended 2025 with strong FCF visibility for 2026 ($8.5B target).
why it’s rated (A)
The Commercial Moat: If you fly on an A320neo, there is a 50% chance an RTX engine is providing the thrust. That is a "Sovereign" position.
Diversification: Unlike NOC or LMT, RTX isn't 100% reliant on the Pentagon. They benefit from global travel growth.
The Cap: The 7.8% ROIC is simply too low for a higher rating. The company is still "paying for the past" (the UTC/Raytheon merger debt and engine issues).
final determination
Rating: Old York Quality (A)
Classification: The Diversified Sovereign.
RTX is the "Core" of any industrial registry. It receives an (A) because its $268B backlog is an insurmountable wall, even if its current Capital Velocity is hindered by its balance sheet. It is a "Cash Cow" that is finally back in the pasture.
Disclaimer: Old York Financial operates privately as a principal and sells corporate advisory. Old York Financial is not an accountant, a financial advisor, a broker, an agent, a lawyer, or a portfolio manager.
