Jim Cramer Notes RTX Faces Valuation Pressure as Rates Rise

RTX stock has pulled back 13.8% from its August high but remains up 23.5% over 52 weeks. The company reported Q2 revenue of $24.7B, up 14.5% YoY, and adjusted EPS of $1.89, up 21.1% YoY. RTX has a $289B backlog and raised its 2026 outlook. Analysts have a consensus 'Moderate Buy' rating with an average price target of $231.83.

RTX shares fell 1.1% to $191.49 after the FAA estimated tariffs could add $100M to its air-traffic-control modernization effort. The company trades 24.09% above its GF Value™ of $154.31. RTX is investing in domestic production capacity, but contract details and profitability remain uncertain.

The US State Department approved a potential $24.3B sale of 48 F-35A fighters and 49 engines to Saudi Arabia, including support equipment and training. Lockheed Martin, the manufacturer, and RTX subsidiary Pratt & Whitney are involved. The deal requires congressional review and could face opposition due to security concerns. If finalized, it would make Saudi Arabia the 20th operator of the F-35.

Gina Rinehart's Hancock Prospecting has invested in nine mining and metals companies in a year, diversifying from iron ore. Recent investments include A$8.77 million in White Cliff Minerals (ASX: WCN) for a 13.5% stake, and A$125 million in Arafura Rare Earths (ASX: ARU). Hancock also holds stakes in Rare Earths Americas (NYSE: REA), MP Materials (NYSE: MP), and Lynas Rare Earths (ASX: LYC). The company has also invested in defence contractors and SpaceX.

President Trump approved a $2.8 billion sale of heavy bombs to Israel, including 40,000 one-ton bombs, 20,000 2,000 lb. bombs, and 20,000 bunker-busting warheads. The weapons will replenish Israel's stockpile, which has been used in Gaza, the West Bank, and Lebanon. Human rights groups have condemned the use of these bombs, citing their impact on civilians and infrastructure. The sale involves U.S. defense contractors Boeing, Lockheed Martin, RTX, General Dynamics, and Northrup Grumman.

The Pentagon awarded Boeing (BA) and RTX (RTX) contracts to boost production of missile defense components. RTX's backlog reached $289B, while Boeing's defense work offsets commercial aviation challenges. Both stocks reacted negatively to the news, suggesting limited upside. The deals are part of a broader U.S. missile buildup, with Congress allocating $6.3B for munitions and the Pentagon requesting $95B for fiscal 2027.