RTX Corporation (RTX) Stock: Strong Q125 Growth Overshadowed by Tariff Fears

TLDR

RTX shares fell 9.81% to $113.75 despite 8% organic sales growth and a 10% EPS increase. Q1 adjusted EPS reached $1.47; segment operating profit grew 18% to $2.5 billion. Free cash flow hit $792 million, up $900 million from last year. Raytheon segment saw a 5% sales drop due to a cybersecurity business divestiture. Tariffs may cost RTX $850 million, raising uncertainty for full-year forecasts.

RTX Corporation (NYSE:RTX) shares plunged 9.81% to $113.75 on April 22, following the release of first-quarter 2025 results. The drop came despite strong earnings and sales performance, as investors focused on growing concerns about tariffs and global trade pressures. RTX is set to report its next earnings between July 21 and July 25, 2025.

RTX Corporation (RTX)

Strong Quarterly Growth and Profitability

In Q1 2025, RTX posted adjusted sales of $20.3 billion, marking a 5% year-over-year increase and 8% organic growth. The company also delivered a 120 basis point expansion in segment margins and a segment operating profit of $2.5 billion, up 18% from last year.

Adjusted earnings per share reached $1.47, a 10% increase. GAAP EPS from continuing operations came in at $1.14. Commercial aftermarket sales jumped 21%, while commercial OE and defense sales rose by 3% and 4%, respectively.

RTX reported $792 million in free cash flow during the quarter and returned $890 million to shareholders, primarily via dividends. The company holds a $217 billion backlog, up 8% year-over-year, highlighting long-term demand visibility.

Segment Performance and Bookings

Collins Aerospace reported $7.2 billion in sales, growing 9% organically. Pratt & Whitney delivered $7.4 billion in revenue, also up 14% both adjusted and organically.

Raytheon segment sales were impacted by the divestiture of the Cybersecurity business, leading to a 5% drop in adjusted sales. However, organic growth in the segment stood at 2%. Its book-to-bill ratio for the quarter was 0.70, with a rolling 12-month figure of 1.35, reflecting a healthy pipeline.

Tariff Risks Trigger Market Concern

Despite the earnings beat, RTX warned of up to $850 million in potential cost headwinds from tariffs. These tariff impacts have not been baked into the company’s 2025 outlook, raising concerns about future margins and earnings consistency.

Management also flagged supply chain risks tied to global trade instability. These headwinds could disrupt operations and delay deliveries, especially if tariffs remain in place throughout the year.

Investors reacted swiftly to this uncertainty, leading to a nearly 10% drop in the stock price. The lack of clarity around the financial impact of trade policy contributed to the negative market sentiment.

Stock Performance and Outlook

Year to date, RTX shares are down 1.20%, still outperforming the S&P 500’s 10.10% drop. Over the past year, RTX has returned 14.46%, and over five years, the stock has delivered a strong 103.10% gain, outpacing the broader index.

With solid free cash flow of $5.37 billion over the trailing 12 months and moderate debt levels, RTX remains financially sound. However, the stock’s near-term trajectory could remain volatile as investors weigh trade uncertainties against long-term growth potential.

RTX’s performance reflects a solid business with strong execution, but global macroeconomic headwinds could pressure margins and limit upside in the coming quarters.

 

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