On August 27, RTX Corporation (NYSE:RTX) announced that its Raytheon unit had completed a $50 million expansion of its Forest, Mississippi, manufacturing facility.
The project is set to expand the production capacity for vital electronic warfare and radar systems, including the Next Generation Jammer Mid-Band (NGJ-MB) and other airborne radar programs.
For investors, the question remains whether the doubling down on defense manufacturing makes RTX a stock to buy or is the growth already priced in?
Strategic Relevance
The site has now become one of the largest defense manufacturing facilities in the state, encompassing 445,000 square feet.
The expansion will serve as a hub for the production of Next Generation Jammer Mid-Band (NGJ-MB) pods for the U.S. Navy and the Australian government, alongside other airborne radar programs. It is expected to create around 100 high-skill jobs.
RTX Corporation has spent around $280 million over the past decade on three facility expansion projects. The recent investment can be seen as a sign of confidence considering the company’s record backlog and robust defense demand.
Bull Case
RTX ended the second quarter with a backlog of $289 billion, increasing 22% from a year earlier. This included a defense backlog of $119 billion, while commercial aerospace orders stood at $170 billion.
The expansion in Mississippi is tangible proof of the defense contractor’s capacity investment for programs that are sitting in the backlog.
The company beat Wall Street’s estimates for both revenue and sales for the second quarter, and lifted its outlook for the full year amid sustained demand for commercial aircraft maintenance and military systems.
Moreover, the stock has a one-year average share price target of $234.47, as of the close on September 3, representing an upside potential of 16%.
Bear Case
RTX Corporation’s valuation looks stretched. It is trading at a forward price-to-earnings ratio of 27.72, which is well above the sector median of 19.92, as well as peers such as Lockheed Martin, Northrop Grumman, and General Dynamics.
The stock is also lagging behind the industry average on certain other metrics, including Return on Total Capital (6.69% vs. 6.98%) and Return on Common Equity (12.02% vs. 12.63%).
While the backlog figure is approximately three times the company’s projected annual revenue for 2026, it has not converted to cash flow yet. The promised work is yet to be delivered and paid for, and therefore is open to execution risks.
Moreover, significant tariff and geopolitical challenges still exist industry-wide, which could impede financial and operational performance, despite the recent guidance raise.
Hedge Fund Ownership Trends
According to Insider Monkey’s database for Q2 2026, 92 hedge funds held a stake in the company, down slightly from 95 at the end of the first quarter.
Fisher Asset Management remained the largest stakeholder in RTX, as of June 30, with shares worth $4.34 billion, up 1.2% sequentially.
Point72 Asset Management climbed from third to second spot during the quarter, with holdings of nearly $626 million, a 58% investment increase from Q1.
The third major investor in the aerospace and defense contractor is D E Shaw, holding 2,760,281 shares worth $524 million as of June 30.
Closing Take
The expansion in Mississippi supports the robust $289 billion backlog with real capacity. However, RTX Corporation’s premium valuation suggests much of the growth is already priced in.
The stock currently is more of a hold and watch than a screaming buy. Investors will be keeping a close eye on how the company executes delivery on backlog before determining their next move.
RTX is expected to announce results for the third quarter during the fourth week of October.
READ NEXT: NOC Steady at $2.47: A Closer Look at Northrop Grumman Corporation (NOC)’s Dividend Discipline and Is General Dynamics Corporation (GD) Still a Dividend Powerhouse? The Bull and Bear Case
