RTX vs TDG: Which Is the Better Buy in 2026?
Last updated October 2026
Short answer
RTX is the larger of the two ($261.36B market cap): the incumbent the market prices for continued execution (24.64x forward earnings, beta 0.31). TDG is the smaller challenger ($63.73B), priced similarly on forward earnings (23.42x): more room to run, but more to prove. The real question is which set of drivers you believe, and whether owning one (or both) leaves you over-concentrated.
RTX vs TDG: the tie-breaker metrics
Same yardstick, side by side (as of October 2026). Valuation lined up like this is most meaningful for two names in the same corner of the market, which these are. Figures are approximate; verify before investing.
| Metric | RTX | TDG | What it tells you |
|---|---|---|---|
| Market cap | $261.36B | $63.73B | Size. The larger name is the incumbent; the smaller has more room to grow and more to prove. |
| Forward P/E | 24.64 | 23.42 | Valuation on next year's expected earnings, the same yardstick for both. Lower is cheaper for that growth; higher means the market is paying up. |
| Trailing P/E | 34.14 | 34.56 | Valuation on the last 12 months. A big drop from trailing to forward means the market expects earnings to jump, so more growth is already in the price. |
| Beta | 0.31 | 0.94 | Volatility vs the market. Above 1 swings harder than the index; below 1 is steadier. Higher beta means bigger drawdowns to hold through. |
| Price vs 52-week range | 53% of range | 17% of range | Where today's price sits between the 52-week low and high. Near the high is momentum with less margin of safety; near the low is out of favor or a discount, depending on why. |
Before you buy: how RTX and TDG affect your concentration
The metrics above tell you which is the marginally better business. The bigger risk for most people is not picking the slightly worse stock, it is over-concentrating. RTX and TDG share themes, so owning both, or adding either to what you already hold, can quietly push a large share of your portfolio into one bet.
This is the part a generic comparison page cannot answer, because it depends on what you own. Connect your brokerage and Walnut shows your real, combined RTX and TDG exposure, flags overlap with your existing positions, and tells you if adding one would tip you past a concentration you are comfortable with, read-only by default, with your login staying at your broker. Walnut is not an investment adviser.
What does RTX Corporation (RTX) do?
RTX Corporation (RTX), formerly Raytheon Technologies, is one of the world's largest aerospace and defense companies. It operates three businesses. Collins Aerospace supplies avionics, interiors, actuation, and other systems for commercial and military aircraft. Pratt & Whitney designs and manufactures jet engines for airliners (including the geared turbofan) and military aircraft, and earns substantial recurring revenue from servicing its large installed engine base. Raytheon, the defense segment, builds missiles, missile defense systems (including Patriot), radars, and other advanced defense electronics for the US military and allied governments.
What does TransDigm Group (TDG) do?
TransDigm Group designs and manufactures highly engineered aerospace components used on commercial and military aircraft. Its business model is distinctive: it focuses on proprietary, sole-source parts (things like pumps, valves, actuators, ignition systems, cockpit controls, and specialized fasteners) where TransDigm is often the only approved supplier for a given aircraft. A large share of revenue comes from the aftermarket, selling replacement parts and spares over the decades-long service life of an aircraft, which carries very high margins and recurring demand. TransDigm grows through a disciplined acquisition strategy, buying niche aerospace-parts makers with similar proprietary, sole-source characteristics and then applying its playbook of value-based pricing and cost discipline. The company is known for a private-equity-style approach to capital allocation, high leverage, and large special dividends. Headquartered in Cleveland, Ohio, it serves commercial airlines, business jets, and defense customers worldwide.
RTX vs TDG: how do they differ?
Both fit overlapping themes, but they are not interchangeable. The useful comparison is which set of drivers and risks you want exposure to.
- RTX drivers: Commercial aftermarket; Defense backlog and missiles.
- TDG drivers: High-margin proprietary aftermarket; Acquisition-driven growth.
Which fits which kind of investor
A faster-growing, richer-valued name usually swings harder, so it suits a longer horizon and a higher tolerance for volatility; a steadier, more cash-generative business suits a more conservative or income-minded investor. The honest test is which set of risks you could hold through a drawdown: RTX faces program-execution risks, most visibly the Pratt & Whitney geared-turbofan powder-metal inspection issue that forced costly engine removals and weighed on cash. For TDG, transDigm carries very high debt, a deliberate part of its model, which raises interest costs and financial risk if cash flow weakens or rates stay elevated.
RTX or TDG: which should you pick?
Growth-minded investors who believe the theme has years to run tend to accept the richer multiple for more upside; value-minded investors lean toward the cheaper forward earnings and steadier profile. Pick RTX if you believe its drivers more; TDG if you believe its. Many investors hold both, but since they share themes, that is a concentrated bet, not diversification. Decide deliberately and check overlap. For the full detail, see the RTX and TDG guides.
RTX vs TDG: the full fundamentals
RTX. RTX trades as a large, dividend-paying aerospace and defense blue chip, now at about 34 times trailing and 24 times forward earnings after a 22% one-year gain. The premium rests on double-digit revenue growth, four straight quarterly EPS beats and about $9.9 billion of trailing free cash flow, weighed against program-execution risk like the geared-turbofan issue. Q3 2026 results on October 20 (consensus EPS about $1.78 on about $24.1 billion of revenue) are the next check.
TDG. Figures are approximate as of October 16, 2026. TransDigm still trades at a premium, about 23.5 times forward earnings and 18 times EV/EBITDA, but less of one than at the start of 2026 after a roughly 16% decline. Consensus expects fiscal 2027 EPS near $48.65, up about 18%, while net debt above $30 billion keeps the stock sensitive to rates, air-traffic cycles and any erosion of pricing power.
Headline figures (approximate, October 2026): RTX shows revenue (ttm) ~$93.5 billion, revenue growth (q2 2026, yoy) ~14.5%, operating margin ~12.7%, net income (ttm) ~$7.7 billion; TDG shows revenue (ttm) ~$10.0 billion, up ~22.5% YoY in the latest quarter, margins (ttm) ~60% gross, ~46% operating; EBITDA ~$5.1 billion, net income (ttm) ~$1.9 billion; trailing EPS ~$33, latest quarter (fiscal q3, ended jun 27, 2026) Revenue ~$2.74 billion; adjusted EPS $10.87 vs ~$10.28 expected.
The bottom line: RTX vs TDG
RTX and TDG are related but distinct: same themes, different businesses and risks. Neither wins in the abstract; the right pick is whichever thesis you actually believe, sized so you are not over-concentrated in one theme. Walnut can show your combined RTX and TDG exposure against your real portfolio. It is not an investment adviser.
Wondering how RTX or TDG fits the portfolio you already own? Walnut is an AI investing app that connects your brokerage read-only and answers questions like that about your actual holdings: overlap, concentration, and how each position tracks the S&P 500. Compare the best AI portfolio analyzers or see the best AI investing apps in 2026.
Investing in RTX Corporation with AI
Connect the broker you already use and ask Walnut's AI how RTX fits what you actually hold: whether you own it already through a fund, what it would do to your concentration, and how it has tracked the S&P 500. Read-only by default, and you approve anything before it reaches your broker.
FAQ
What is the difference between RTX and TDG?
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RTX Corporation (RTX), formerly Raytheon Technologies, is one of the world's largest aerospace and defense companies. TransDigm Group designs and manufactures highly engineered aerospace components used on commercial and military aircraft. They show up together because they share investment themes, but they are different businesses, so the better fit depends on which thesis you are expressing.
Is RTX or TDG the better stock?
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Neither is universally better. RTX is the larger incumbent; TDG is the smaller challenger and looks cheaper on forward earnings. Walnut is informational, not investment advice. Compare what each does, the tie-breaker metrics above, and the risks, then decide which fits your thesis and what you already own.
Which is cheaper, RTX or TDG?
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On forward P/E (as of October 2026), RTX trades at 24.64x and TDG at 23.42x, so TDG is the cheaper of the two on next year's expected earnings. A lower multiple is not automatically the better buy: a richer valuation can be justified by faster growth, and a lower one can reflect real risk. Weigh the multiple against how fast each business is compounding.
Should you own both RTX and TDG?
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Because they share themes, owning both concentrates you in that theme. That can be intentional (a focused bet) or accidental (less diversification than it looks). Walnut can show your combined exposure across both, and whether adding either over-concentrates you, before you buy.
What are the risks of RTX vs TDG?
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RTX: RTX faces program-execution risks, most visibly the Pratt & Whitney geared-turbofan powder-metal inspection issue that forced costly engine removals and weighed on cash. Defense contracts can carry fixed-price exposure, supply-chain and labor pressures, and dependence on government budgets and procurement timing. Commercial aerospace is cyclical and sensitive to airline health, fuel prices, and travel demand. Large pension, warranty, and regulatory liabilities add complexity, and the stock can be hit by single-program problems given its size. Debt of about $38.9 billion against about $8.3 billion of cash limits flexibility. Valuation is another consideration: at about 34 times trailing and 24 times forward earnings, the shares price in continued growth, and some analysts trimmed targets in October 2026 (RBC cut its target to $235 from $250). Geopolitical shifts cut both ways: they support defense demand but introduce export-control and policy risk. Margins depend on disciplined execution across many long-cycle programs. TDG: TransDigm carries very high debt, a deliberate part of its model, which raises interest costs and financial risk if cash flow weakens or rates stay elevated. Commercial aftermarket revenue is sensitive to air-traffic cycles; a downturn in flying (as in a recession or pandemic) cuts demand sharply. The company's aggressive pricing on sole-source parts has drawn government scrutiny, including Department of Defense reviews of pricing to the military, creating regulatory and reputational risk. Growth depends on continued availability of attractive acquisitions at reasonable prices. The stock often trades at a premium valuation, leaving it exposed to multiple compression if growth or margins disappoint, and high leverage amplifies downside in stress scenarios. The share price has de-rated in 2026 (down about 16% year to date as of October 16) even as earnings beat, and several brokers cut targets in October, so sentiment rather than reported results has been the recent drag.
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Walnut is informational, not investment advice. This page is descriptive and not a recommendation to buy or sell RTX or TDG; figures are approximate and dated (as of October 2026). Verify current data before investing.