Jim Cramer Says Defense Giant Still Too Expensive, Despite $22.9 Billion Tomahawk Missile Deal
RTX just landed one of the biggest missile contracts in Pentagon history, yet Jim Cramer told a Florida caller to brace for more pain ahead. Here is why a $289 billion backlog may not be enough to stop the bleeding.
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On the night the Federal Reserve delivered a quarter-point rate hike, a caller from Florida asked Jim Cramer what was going on with Raytheon parent RTX (NYSE:RTX | RTX Price Prediction). Cramer’s answer was blunt: the stock trades at 27 times earnings, and in a rate-hiking cycle “that P E multiple … has to come down and that’s why that stock is going lower.” He added that “buyers will come back, but they won’t come back to the same place.”
Cramer framed the broadcast around a bigger message. The Fed had raised rates a quarter of a percent that afternoon, sending the Dow down 631 points, and Cramer called it “officially fighting the Federal Reserve.” In that regime, he said tech and pharma can survive on what he called an industrial revolution cycle, while financials, retail, travel and leisure “simply don’t work.” RTX, in his view, sits on the wrong side of the multiple-compression trade.
A Nearly $23 Billion Tomahawk Win Just Days Earlier
The timing is the interesting part. A September 12, 2026 report was headlined “RTX Lands a $22.9 Billion Tomahawk Deal: What It Means for the Stock.” The Tomahawk cruise missile is a Raytheon program, and the Department of Defense’s own FY2027 weapons budget names Raytheon Missiles & Defense in Tucson, Arizona as the prime contractor for continued Tomahawk procurement and mid-life recertification under a multi-year contract.
RTX has kept stacking wins around that headline. On September 15, 2026, the company announced Hermeus will manufacture Pratt & Whitney’s F100-PW-229 engine under a new production licensing agreement, and named Jill Albertelli president of Pratt & Whitney.
The stock, though, agrees with Cramer in the short run. RTX is down 10.11% in the trailing month to September 17, from $221.64 on August 17 to $199.24, even as it remains up 27.5% over the past year and up 165.99% over five years.
Checking Cramer’s 27x Multiple Claim
Cramer’s headline number is his own. Alpha Vantage pegs RTX’s trailing P/E at 34x and its forward P/E at 25x, with diluted trailing EPS of 5.73, a PEG ratio of 2.265, and an EV/EBITDA of 18x. The analyst target price sits at $234.82, with four strong buys, 11 buys, eight holds and zero sells. Whichever multiple you use, RTX is not cheap on trailing earnings, which is the crux of Cramer’s argument.
Fundamentals Cramer Isn’t Disputing
The business itself is running hot. Q2 2026 adjusted EPS of $1.89 beat the $1.66 consensus, revenue rose 14.5% year over year to $24.71 billion, and total backlog reached $289 billion, up 22% year over year. Raytheon specifically booked nearly $20 billion of awards in the quarter on a 2.4 book-to-bill, including over $5 billion of GEM-T Patriot Effectors, $1.8 billion for AMRAAM, and $1.1 billion for AIM-9X. Management raised the FY2026 outlook to adjusted sales of $95.0 to $96.0 billion, adjusted EPS of $7.10 to $7.25, and free cash flow of $8.50 to $8.75 billion. Chief Executive Chris Calio called out that the base defense budget request of $1.1 trillion “represents a roughly 25% increase year over year, along with meaningful increases in funding for RTX priority programs, including Tomahawk, LTAMs, and Standard Missile.” Details are in the company’s Q2 2026 earnings exhibit filed with the SEC.
Macro Backdrop: The Fed Just Moved
The Fed’s own data confirms the tightening. The Federal Funds target upper bound sits at 3.75% as of September 16, 2026, and Cramer’s thesis is straightforward: higher discount rates should shrink the multiple investors are willing to pay for future earnings, no matter how full the backlog looks today. That is the collision he laid out for the caller from Florida. The Tomahawk franchise keeps winning. The multiple, he argues, has further to fall before buyers step back in.
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AJ spent 10 years writing about financial markets at The Motley Fool. His coverage centers on technology stocks and the broader macroeconomic trends, from interest rates to geopolitics, that shape where markets are headed next. AJ is drawn to the stories where big-picture economics and individual companies collide.
