Raytheon’s Missile Windfall: What the Navy’s Record Tomahawk Order Means for RTX Corporation (RTX)

On August 17, the U.S. military awarded Raytheon business, part of RTX Corporation (NYSE:RTX), a staggering $22.9 billion contract to expedite the production of Tomahawk missiles. This contract, which spans seven years, aims to significantly increase the annual output of these missiles from the current 60 units to 1,000 units annually.

The deal was part of the Pentagon's "Arsenal of Freedom" initiative to bolster the Navy's depleted stockpiles following their use and distribution to allies during the Iran conflict. The contract represents approximately 3.4% of the estimated 2026 sales, suggesting the stock may not be significantly impacted by this award. However, investors should consider whether Raytheon can scale up production without compromising margins, as the company anticipates adjusted EPS between $7.10 and $7.25 per share, up from earlier estimates of $6.70 to $6.90.

The stock has already seen a 15% increase year-to-date, trading at a forward price-to-earnings ratio of 29.31. Hedge fund interest in RTX Corporation has also increased, with ownership rising from 79 in the previous quarter to 95 as of June 30, with the largest holdings valued at over $4.3 billion. Despite these positive indicators, investors will closely monitor whether RTX can rapidly expand production of critical weapons like Tomahawk missiles while maintaining profitability.