Using an unlevered Free Cash Flow to Firm (FCFF) model, we project RTX Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 5.5% to 5.8% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 120, DPO 70, DIO 71). At a 8.6% WACC with mid-year discounting, the terminal value (91% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 21.0x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $121.70 per share, suggesting RTX is overvalued by 36.6% at the current price of $192.04.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 5,178 | 5,532 | 5,871 | 6,077 | 6,427 | 6,588 |
| (−) Net Interest | 2,040 | 2,180 | 2,313 | 2,395 | 2,533 | 2,596 |
| (+) D&A | 2,703 | 2,932 | 3,118 | 3,272 | 3,561 | 3,650 |
| EBITDA | 9,921 | 10,644 | 11,303 | 11,743 | 12,521 | 12,834 |
| (−) Tax | 817 | 872 | 926 | 958 | 1,014 | — |
| (−) CapEx | 3,469 | 3,706 | 3,933 | 4,071 | 4,306 | — |
| (−) ΔWC | 1,674 | 2,114 | 2,028 | 1,229 | 2,093 | — |
| Free Cash Flow (FCF) | 3,961 | 3,951 | 4,416 | 5,485 | 5,108 | — |
| Peers' EBITDA Multiple | 21.0x | |||||
| Terminal Value | 269,252 | |||||
| WACC / Discount Rate | 8.55% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 3,802 | 3,493 | 3,597 | 4,116 | 3,531 | 178,629 |
| Enterprise Value | 197,168 | |||||
| Projection Period | 18,539 | 9.4% | ||||
| Terminal Value | 178,629 | 90.6% | ||||
| (−) Current Net Debt | 32,071 | |||||
| Equity Value | 165,097 | |||||
| (÷) Outstanding Shares | 1356M | |||||
| Fair Price | $122 | -36.6% | ||||
| WACC \ EV/EBITDA Exit Multiple | 17.0x | 19.0x | 21.0x | 23.0x | 25.0x |
|---|---|---|---|---|---|
| 6.6% | $108 | $121 | $135 | $149 | $163 |
| 7.6% | $102 | $115 | $128 | $141 | $155 |
| 8.6% | $97 | $109 | $122 | $134 | $147 |
| 9.6% | $92 | $103 | $115 | $127 | $139 |
| 10.6% | $87 | $98 | $110 | $121 | $133 |
Current price: $192.04. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.