RTX Corporation (RTX) kicked off Tuesday with a rally after reporting fourth-quarter results that showed the aerospace and defense manufacturer firing on all cylinders. Sales, earnings, and cash flow all came in ahead of expectations, and the company's outlook suggests the momentum isn't slowing down anytime soon.

Fourth-quarter sales hit $24.238 billion, a solid 12% increase from the $21.623 billion posted a year earlier. The company delivered GAAP diluted EPS of $1.19, compared with $1.10 in the prior-year quarter. That figure included $0.31 of acquisition accounting adjustments, $0.02 of restructuring charges, and $0.03 of other significant items.

Adjusted EPS climbed 1% to $1.55, beating analyst estimates that had called for $1.47. Revenue also exceeded the Street's $22.737 billion expectation by a comfortable margin. Wall Street likes when companies beat on both lines, and investors responded accordingly.

Cash Generation and Backlog Tell the Story

Operating cash flow for the quarter reached $4.165 billion, with free cash flow coming in at $3.195 billion after subtracting $1.0 billion in capital expenditures. That's a sharp improvement from the prior year and reflects the kind of cash generation that makes defense contractors attractive in the first place.

The company's backlog stands at $268 billion, split between $161 billion in commercial aerospace work and $107 billion on the defense side. That's essentially years of revenue visibility, which provides a nice cushion for planning and investment. RTX also wrapped up the sale of Collins' Simmonds Precision Products business during the quarter.

Breaking Down the Business Segments

Collins Aerospace posted fourth-quarter sales of $7.736 billion, up 3% from last year. Reported operating profit was $1.402 billion, though adjusted operating profit came in at $1.223 billion. The reported figure included a gain from the Simmonds sale, while the adjusted number reflected some pressure from divestiture impacts and higher tariffs hitting the business. Adjusted return on sales was 15.8%.

Pratt & Whitney, the engine division, delivered the strongest growth with sales jumping 25% to $9.496 billion. Adjusted operating profit reached $776 million for an 8.2% return on sales. The growth came from higher commercial and military volume, though it was partially offset by higher tariffs, increased selling and administrative expenses, and the absence of a roughly $70 million insurance recovery that boosted the prior year. Last year's results also included a $157 million charge related to a customer bankruptcy.

Raytheon, the missiles and defense systems unit, reported sales of $7.657 billion, up 7%. Operating profit was $885 million with an 11.6% return on sales. The division benefited from higher volume on land and air defense systems like Patriot and GEM-T, plus naval programs including the Evolved SeaSparrow Missile and Tomahawk cruise missile.

Full-Year Performance

For all of 2025, RTX delivered sales of $88.603 billion, up 10%, with organic sales growth hitting 11%. GAAP diluted EPS was $4.96, while adjusted EPS reached $6.29. Net income attributable to common shareholders totaled $6.732 billion, and adjusted net income was $8.531 billion.

Operating cash flow for the year was $10.567 billion, and free cash flow came in at $7.940 billion after $2.627 billion in capital expenditures. The company ended the year with $7.435 billion in cash and cash equivalents against $37.700 billion in total debt.

Looking Ahead to 2026

For 2026, RTX is guiding for adjusted sales between $92.0 billion and $93.0 billion, roughly in line with the analyst consensus of $92.461 billion. That implies organic sales growth of 5% to 6%. Adjusted EPS is expected to land between $6.60 and $6.80, bracketing the Street's $6.71 estimate. Free cash flow is projected at $8.25 billion to $8.75 billion.

"RTX delivered strong sales, adjusted EPS and free cash flow in 2025, enabled by our continued focus on operational performance and execution," said RTX Chairman and CEO Chris Calio. "We enter 2026 with great momentum and are well positioned to deliver our 2026 financial outlook."

RTX shares jumped 3.04% to $200.03 in premarket trading Tuesday, pushing close to the stock's 52-week high of $203.03. Investors seem pleased with the combination of strong execution, healthy cash flow, and a guidance range that suggests the company can keep delivering.