RTX Corporation (NYSE:RTX) saw its stock rise sharply after the aerospace and defense giant exceeded expectations in its latest earnings report; the company reported adjusted earnings of $1.89 per share, beating analysts’ estimate of $1.66 per share, according to Benzinga Pro. Sales grew 14% year over year to $24.71 billion, outperforming the expected $22.89 billion. Organic sales increased by 16%.

Financial Highlights and Operational Performance

GAAP diluted earnings per share increased 29% to $1.57, while adjusted earnings per share rose 21% to $1.89; Net income climbed 29% to $2.14 billion, and adjusted net income increased 22% to $2.58 billion. However, quarterly results included adjustments that reduced earnings by 27 cents per share due to acquisition accounting, 5 cents per share from restructuring charges, and a $69 million pretax litigation charge.

Operating cash flow reached $3.55 billion, and free cash flow hit $2.88 billion after capital expenditures of $669 million. RTX ended the quarter with $8.31 billion in cash and cash equivalents, while long-term debt stood at $31.86 billion, with $5.30 billion due within one year.

Record Backlog and Strategic Moves

Total backlog rose 22% from a year earlier to $289 billion, including $170 billion in commercial orders and $119 billion in defense orders; this record backlog reflects strong demand across both sectors. In a strategic move. The company agreed to sell Raytheon’s Blue Canyon Technologies business for $620 million.

Collins Aerospace reported sales of $8.21 billion, up 8% year over year, with commercial original equipment sales increasing by 26% and defense sales rising 7%. Pratt & Whitney posted sales of $8.89 billion, up 16%, driven by a 25% increase in commercial aftermarket sales and a 23% rise in military sales, partially offset by an 8% decline in commercial original equipment sales.

Market Reaction and Analyst Outlook

Despite the strong earnings report, RTX stock fell 19% from its highs, according to TIKR. The stock held near its peak through January and into February before beginning a two-wave decline. The first drop brought the stock down about 12% in March, followed by a second and deeper pullback that reached a maximum drawdown of 19% on May 15, nearly a month after the strong quarterly report.

Two factors contributed to the market’s mixed reaction: concerns over tariffs impacting the commercial aerospace supply chain, acknowledged by management during the Q1 earnings call, and potential litigation risks related to Pratt & Whitney engine issues. Reports indicated that ITA Airways was considering legal action over engine inactivity, adding uncertainty to the stock.

Meanwhile, RTX’s adjusted earnings per share for Q1 2026 were $1.78, a 21% increase from the prior year, and organic sales grew by 10%. Free cash flow for Q1 2026 totaled $1.3 billion, a 65% increase year over year. The company raised its full-year guidance for adjusted EPS to a range of $6.70 to $6.90, according to TIKR.

Plus, RTX secured a $2 billion contract with the UK Army for training systems, reinforcing its position in the defense sector. This award aligns with the company’s strategy to expand in advanced defense systems, including recent contracts like the U.S. Navy’s $1.1 billion AIM-9X Block II missile contract.