On August 3, Raytheon, an RTX Corporation (NYSE:RTX) business, finished installing the first SPY-6(V)4 radar array at a Navy test site on Wallops Island, Virginia. The milestone kicks off testing that will decide how fast the Navy can modernize a fleet of aging destroyers, and it lands at a moment when RTX is already sitting on one of the largest order backlogs in its history. That combination makes this a good time to look at where the stock actually stands.
Bull Case: A Radar Program That Keeps Growing
Raytheon is utilizing its Wallops Island site to integrate the SPY-6(V)4 radar array ahead of its planned retrofit on the USS Pinckney (DDG 91), establishing an integration framework before broader rollout across sister ships. This deployment sits within a wider naval transition where SPY-6 variants are currently active on two commissioned vessels, installed on 11 in testing, and targeted for more than 50 ships over the next decade, supported by an $800 million manufacturing investment to double output by 2028. In parallel, Raytheon serves as the primary system architect and radar provider for the Patriot system, generating recurring revenue through US and international military sales, maintenance, software retrofits, and radar upgrades.
These defense operations are reflected in the company’s financial performance. Global missile replenishment demand drove total backlog to a record $289 billion in Q2, prompting management to raise full-year earnings and free cash flow guidance. For the second quarter, revenue grew 14% year over year to $24.7 billion, EPS increased 29% from Q2 2025 to $1.57, and profit margin expanded to 11.4% from 9.9%.
Bear Case: The Payoff Is Still Years Away
The SPY-6(V)4 program is still in its early innings. Testing at Wallops Island will not wrap up until mid-2028, and DDG 91 is only the first of what will need to be many Flight IIA destroyers backfitted before the program contributes meaningfully to results. Until then, the radar sits in a test environment rather than generating the revenue Raytheon books once a ship is fully outfitted and commissioned.
That drawn-out runway matters because RTX’s growth story increasingly depends on programs like this one converting on schedule. A 14% revenue gain and a 29% jump in EPS set a high bar for future quarters, and any slippage in a multi-year test-and-backfit schedule would push expected revenue further out without necessarily shrinking the long-term size of the opportunity.
What The Market Is Pricing In
Lockheed Martin Corporation (NYSE:LMT) is RTX’s direct, peer-level competitor in the defense and sensor market, trading at a comparable scale and maintaining a rival radar portfolio, headlined by its SPY-7, TPY-4, and Sentinel families, that competes directly with Raytheon’s SPY-6 suite. Demonstrating this competitive dynamic, the US Department of Defense signed a $3 billion framework agreement with Lockheed Martin on June 30 earlier this year, valid through June 2031. The deal covers engineering support and production orders for the AN/MPQ-64 Sentinel A4 radar stations, an advanced system designed to simultaneously track three distinct threat vectors (including manned and unmanned aircraft, cruise missiles, and artillery/mortar fire) while integrating with the military’s Integrated Battle Command System/IBCS.
Hedge fund positioning in RTX climbed from 79 funds to 95 over the most recent two quarters, while Lockheed Martin funds rose from 59 to 83 over the same stretch, so both stocks are attracting more institutional buyers rather than fewer. Short interest is light for each name, at 1.27% of float for RTX and 1.62% for Lockheed Martin, suggesting little organized skepticism either way. The bigger gap sits in valuation: As of August 5, RTX trades at 29.94x forward earnings versus 19.16 for Lockheed Martin, meaning the market is already paying up for RTX’s growth relative to its peer.
Where This Leaves Investors
RTX’s Wallops Island milestone is a real step forward for a radar franchise with a long runway ahead of it, backed by a backlog and a margin trend that are both moving in the right direction. Turning that promise into results depends on the Navy’s testing and backfit schedule holding through mid-2028, since that is when the SPY-6(V)4 program actually starts converting into revenue.
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