As of May 25, 2025, Raytheon Technologies Corp's estimated intrinsic value ranges from $29.95 to $202.21 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $202.21 | +52.8% |
| Discounted Cash Flow (5Y) | $140.76 | +6.4% |
| Dividend Discount Model (Multi-Stage) | $132.20 | -0.1% |
| Dividend Discount Model (Stable) | $60.50 | -54.3% |
| Earnings Power Value | $29.95 | -77.4% |
Is Raytheon Technologies Corp (RTX) undervalued or overvalued?
With the current market price at $132.35, the stock appears to be fairly valued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Raytheon Technologies Corp's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.78 | 0.87 |
| Cost of equity | 7.4% | 9.7% |
| Cost of debt | 4.3% | 5.6% |
| Tax rate | 16.5% | 18.9% |
| Debt/Equity ratio | 0.23 | 0.23 |
| After-tax WACC | 6.7% | 8.8% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $141 | $224,193M | 83.0% |
| 10-Year Growth | $202 | $306,285M | 69.7% |
| 5-Year EBITDA | $155 | $242,957M | 84.3% |
| 10-Year EBITDA | $199 | $301,498M | 69.3% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $5,790M |
| Discount Rate (WACC) | 8.8% - 6.7% |
| Enterprise Value | $66,162M - $86,142M |
| Net Debt | $36,143M |
| Equity Value | $30,019M - $49,999M |
| Outstanding Shares | 1,336M |
| Fair Value | $22 - $37 |
| Selected Fair Value | $29.95 |
| Metric | Value |
|---|---|
| Market Capitalization | $176813M |
| Enterprise Value | $212956M |
| Trailing P/E | 38.44 |
| Forward P/E | 27.62 |
| Trailing EV/EBITDA | 12.85 |
| Current Dividend Yield | 185.96% |
| Dividend Growth Rate (5Y) | 4.17% |
| Debt-to-Equity Ratio | 0.23 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $60.66 |
| Discounted Cash Flow (5Y) | 25% | $35.19 |
| Dividend Discount Model (Multi-Stage) | 20% | $26.44 |
| Dividend Discount Model (Stable) | 15% | $9.07 |
| Earnings Power Value | 10% | $2.99 |
| Weighted Average | 100% | $134.36 |
Based on our comprehensive valuation analysis, Raytheon Technologies Corp's weighted average intrinsic value is $134.36, which is approximately 1.5% above the current market price of $132.35.
Key investment considerations:
Given these factors, we believe Raytheon Technologies Corp is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.