Investment analysis by Ruslan Averin — originally published at averin.com.
Every missile intercepted over the Gulf is a missile that has to be rebuilt and repaid for. That is the unglamorous, mechanical logic behind owning a defense prime during a Strait of Hormuz conflict — and RTX (NYSE: RTX), the old Raytheon, builds the interceptors that actually get fired: the Patriot system, the Standard Missile family (SM-3, SM-6) that forms the Aegis shield for warships in the Gulf, and the Tomahawk.
The numbers as of mid-July 2026
| Metric | Reading (Jul 17, 2026) |
|---|---|
| Share price | ~$195.01 |
| Market cap | ~$262.6B |
| Dividend / yield | $2.72 (→$0.73/q) / ~1.4% |
| P/E (trailing / forward) | ~36 / ~28 |
| Q1 26 adj. EPS | $1.78 (+21% YoY) |
| Backlog | $271B record (+25% YoY) |
| FY26 guide | raised: adj. EPS $6.70–6.90 |
The Hormuz mechanism, with real numbers
Air-defense inventories are consumable, and a Gulf war consumes them fast. The 2025 "12-day war" alone reportedly burned through roughly 25% of the US THAAD interceptor stockpile — 100 to 150 missiles fired — and drained Patriot inventories. Every one of those has to be replenished, and Gulf allies rush to buy more. RTX's 2026 order flow shows it: five seven-year framework agreements in February to scale Tomahawk (over 1,000 a year), AMRAAM, and SM-6 production; a $3.7B Patriot GEM-T order; a $335M SM-6 award; and Qatar Patriot replenishment naming RTX as a principal contractor. When the shooting starts, this is the company writing the invoices — and the record $271B backlog is the multi-year receipt.
RTX's stock reflects it: it popped 3%+ on the June 2025 strikes and is up roughly 38% over the trailing year, with the conflict premium intact. It even has a second engine most defense names lack — Collins Aerospace and Pratt & Whitney give it commercial-aviation exposure, about 60% of that backlog.
The risk: you're paying up for it
Here's the honest problem. At ~36x trailing and ~28x forward earnings, RTX is not cheap — it is priced for a sustained conflict premium. If Hormuz de-escalates durably, the premium compresses. And that commercial-aero half is a double-edged sword: an airline downturn or a repeat of the Pratt geared-turbofan powder-metal problem would hit the majority of the business independent of any Middle East demand. This is a high-quality franchise trading at a rich multiple into a headline-driven tape.
How you'd own it
RTX is the "momentum-at-a-price" leg of a Hormuz basket: the direct beneficiary of interceptor replenishment and Gulf arms sales, but one you're buying near highs. The way to own it is with eyes open — recognizing that a big chunk of the good news is in the multiple already, and that the durable part of the thesis (a multi-year restocking cycle and a record backlog) is real regardless of the next ceasefire, while the near-term momentum can reverse on a peace headline.
My take
Of the two great interceptor makers, RTX is the one the market already loves. I respect the franchise enormously — it owns the missile that gets fired, and the replenishment cycle is a genuine multi-year tailwind, not a one-week pop. But I don't chase quality at 28x forward into a de-escalation-prone tape. The discipline is to want RTX on a pullback, not to pay the peak-premium multiple the day the headlines are worst. The backlog will still be there.
Bottom line: RTX builds the interceptors the Gulf actually runs out of — Patriot, SM-3/6, Tomahawk — so a Hormuz conflict converts straight into a record $271B backlog and replenishment orders. A genuine multi-year winner, but priced richly at ~28x forward; want it on weakness, don't chase the premium.
Not investment advice.
More market analysis by Ruslan Averin at averin.com.
Top comments (0)