RTX Corporation (RTX) vs Verizon Communications Inc. (VZ): Which Is the Better Buy in 2026?
As of 2026-06-19, RTX is overvalued at $186, with a DCF intrinsic value of $119 and a margin of safety of -56%. VZ is overvalued at $45, with an intrinsic value of $40 and a margin of safety of -14%. Of the two, VZ has the wider margin of safety.
Rewards
- ★Free cash flow has grown at a 19.2% CAGR over the past 4 years, demonstrating strong earnings power growth.
- ★Each dollar of retained earnings has created $3.48 of earning power — management is an exceptional capital allocator.
- ★Free cash flow has grown at a 23.7% CAGR over the past 4 years, demonstrating strong earnings power growth.
- ★FCF yield of 10.4% is historically attractive — the business generates significant cash relative to its price.
- ★PEG ratio of 0.88 suggests the stock is undervalued relative to its growth rate — paying less than 1x for each unit of earnings growth.
Risks
- ⚠Gross margin of 20.2% is low, suggesting a competitive or commodity-like market with limited pricing power.
- ⚠FCF yield of 2.9% is below 3%, meaning the market is pricing in substantial future growth to justify the current price.
- ⚠PEG ratio of 2.56 indicates the stock is expensive relative to its expected growth — the market may be pricing in more growth than analysts project.
- ⚠High leverage (1.84x net debt/equity) combined with thin interest coverage (-1.0x) poses financial risk.
- ⚠Altman Z-Score of 1.24 places the company in the distress zone — financial patterns resemble those of companies that experienced bankruptcy.
- ⚠Insiders have sold $3.5M worth of stock in the past 3 months — significant insider liquidation.
Key Valuation Metrics
Learn more →Historical Fundamentals
Learn more →Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
$1 Retained Earnings Test
Learn more →> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Discounted Cash Flow (DCF) Analysis
Learn more →Reverse DCF — Market-Implied Growth
Learn more →What growth rate is the market pricing in at $186?
The market implies +15.4% Owner Earnings growth, above historical trends.
Standard FCF implies a demanding +16.8%, reflecting heavy growth investment.
What growth rate is the market pricing in at $45?
The market implies +8.5% Owner Earnings growth, above historical trends.
Standard FCF implies a demanding +7.3%, reflecting heavy growth investment.
Economic Moat Score
Learn more →Narrow moat with revenue predictability as the key competitive advantage. Improving roic consistency would strengthen the moat.
Narrow moat with margin stability as the key competitive advantage. Improving roic consistency would strengthen the moat.
Forensic Accounting
Learn more →M-Score Trend
M-Score Trend
Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.
Ownership Breakdown
Learn more →High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.
Insider Buying Activity
Learn more →Open market purchases · includes direct & indirect ownership · excludes option exercises.
Insider Selling Activity
Learn more →Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.
🎭 Mr. Market's Mood
Learn more →"Market is pricing this stock without strong emotion in either direction"
"Market is pricing this stock without strong emotion in either direction"
Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.
⚖️ Buffett Signal
Learn more →The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
Frequently Asked Questions: RTX vs VZ
Is RTX Corporation or Verizon Communications Inc. more undervalued in 2026?▼
Based on our discounted cash flow model, VZ trades at a -13.8% margin of safety (intrinsic value $40 vs. price $45), compared to RTX's -56.1% margin of safety (intrinsic $119 vs. $186).
Which stock has a wider economic moat, RTX Corporation or Verizon Communications Inc.?▼
VZ scores 55/100 (Narrow moat), while RTX scores 51/100 (Narrow moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.
Is Verizon Communications Inc. in financial distress?▼
VZ's Altman Z-Score of 1.2 places it in the Distress zone, signaling elevated bankruptcy risk. RTX scores 2.6 (Grey zone). The Altman Z-Score is a five-factor model that predicts insolvency within two years; scores below 1.81 indicate significant distress.
Which company has better free cash flow, RTX Corporation or Verizon Communications Inc.?▼
Verizon Communications Inc. (VZ) generates a 10.4% free cash flow yield, compared to RTX Corporation's 2.9%. A higher FCF yield means the business converts more of its market value into cash that can be returned to shareholders or reinvested.
Which stock has higher return on invested capital, RTX Corporation or Verizon Communications Inc.?▼
VZ earns 9.1% ROIC versus RTX's 8.8%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.
Which dividend is safer, RTX Corporation's or Verizon Communications Inc.'s?▼
VZ's dividend earns a safety score of 84/100 (Very Safe), compared to RTX's 78/100 (Safe). VZ has raised its dividend for 3 consecutive years.