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Textron (TXT)
:TXT
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Textron
(NYSE:TXT)64Neutral
Positive Factors
Aviation Demand
Aviation demand remained positive with book to bill above 1x and backlog up ~3% sequentially.
Valuation
Analyst sees attractive risk/reward with Textron shares trading at a 40% discount to peers.
Negative Factors
Industrial Segment Challenges
Industrial segment facing challenges with a strategic review and production pause leading to a significant drop in sales.
Investor Sentiment
Investor interest in the stock and business jets remains limited as investors point to secondary market inventories coming off lows and the potential for slowing orders.
Textron (TXT) vs. S&P 500 (SPY)
Market Cap
$12.81B
Dividend Yield0.11%
Average Volume (3M)1.39M
Price to Earnings (P/E)16.2
Beta (1Y)0.86
Revenue Growth0.14%
EPS Growth-5.38%
CountryUS
Employees34,000
SectorIndustrials
Sector Strength66
IndustryAerospace & Defense
Share Statistics
EPS (TTM)4.32
Shares Outstanding182,572,770
10 Day Avg. Volume1,340,892
30 Day Avg. Volume1,389,972
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.99
Price to Cash Flow (P/CF)7.60
P/FCF Ratio10.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$92.45Price Target Upside31.71% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering11
Textron Business Overview & Revenue Model
Company DescriptionTextron, Inc. is a multi-industry company, which leverages global network of aircraft, defense, industrial, and finance businesses to provide customers innovative solutions and services. The company operates its business through the following segments: Textron Aviation, Bell, Textron Systems, Industrial, and Finance. The Textron Aviation segment manufactures sells, and services Beechcraft and Cessna aircraft. The Bell segment supplies military and commercial helicopters, tiltrotor aircraft, and related spare parts. The Textron Systems segment product lines consist of unmanned aircraft systems; land and marine systems; weapons and sensors; and a variety of defense and aviation mission support products and services. The Industrial segment designs and manufactures a variety of products under the Golf; Turf Care and Light Transportation Vehicles; Fuel Systems and Functional Components and Powered Tools; and Testing and Measurement Equipment product lines. The Finance segment consists of Textron Financial Corp. and its consolidated subsidiaries, which provides finances primarily to purchasers of new Cessna aircraft and Bell helicopters. The company founded by Royal Little in 1923 and is headquartered in Providence, RI.
How the Company Makes MoneyTextron makes money through a diversified revenue model that encompasses several key streams. The primary source of revenue is from the sale of aircraft and related services, particularly through its Bell and Textron Aviation segments which include Cessna and Beechcraft aircraft. Defense contracts also play a significant role in its revenue, with Textron Systems providing advanced military technologies and solutions. Additionally, its Industrial segment, which includes brands like Kautex and E-Z-GO, generates revenue through the sale of automotive components and specialized vehicles. Textron also benefits from aftermarket services, which provide ongoing maintenance and support for its products. Significant partnerships with government agencies and defense organizations further bolster its earnings by securing long-term contracts and collaborations.
Textron Financial Statement Overview
Summary
Textron exhibits solid financial health with stable revenue and a good equity position. Profitability is mixed with high gross margins but challenges in EBIT. Cash flow shows strong operating cash generation but declining free cash flow, indicating areas for improvement in cash management.Income Statement
Textron showed a slight increase in revenue from $13.68 billion to $13.70 billion in TTM, indicating stability. However, gross profit margin improved significantly from 16.64% to 38.05%, while the net profit margin slightly decreased to 6.01% from 6.73% last year. Notably, EBIT turned negative in TTM, reducing EBIT margin significantly, although EBITDA margin remained positive at 9.63%.60
Neutral
Balance Sheet
The company maintains a healthy equity position with an equity ratio of 42.79% in TTM, and a reduced debt-to-equity ratio of 0.40 from 0.55 the previous year. ROE slightly declined to 11.44% from 13.18%, reflecting stable shareholder returns despite some challenges.70
Positive
Cash Flow
Free cash flow decreased by 24.54% in the TTM period. The operating cash flow to net income ratio is healthy at 1.23, indicating good cash generation relative to net income. However, the reduction in free cash flow signals potential cash management challenges.65
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 13.70B | 13.68B | 12.87B | 12.38B | 11.65B | Gross Profit |
| 2.50B | 2.28B | 2.07B | 2.08B | 1.56B | EBIT |
| 825.00M | 1.05B | 1.12B | 1.02B | 595.00M | EBITDA |
| 1.42B | 1.56B | 1.51B | 1.39B | 827.00M | Net Income Common Stockholders |
| 824.00M | 921.00M | 861.00M | 746.00M | 309.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.39B | 2.18B | 1.96B | 1.92B | 2.15B | Total Assets |
| 16.84B | 16.86B | 16.29B | 15.83B | 15.40B | Total Debt |
| 3.25B | 3.87B | 3.18B | 3.19B | 3.71B | Net Debt |
| 1.86B | 1.69B | 1.22B | 1.26B | 1.56B | Total Liabilities |
| 9.63B | 9.87B | 9.18B | 9.01B | 9.55B | Stockholders Equity |
| 7.20B | 6.99B | 7.11B | 6.82B | 5.84B |
| Cash Flow | Free Cash Flow | |||
| 650.00M | 864.00M | 1.14B | 1.22B | 452.00M | Operating Cash Flow |
| 1.01B | 1.27B | 1.49B | 1.60B | 769.00M | Investing Cash Flow |
| -284.00M | -317.00M | -447.00M | -281.00M | -248.00M | Financing Cash Flow |
| -1.45B | -813.00M | -1.09B | -1.45B | 360.00M |
Textron Technical Analysis
Negative
70.19
Price Trends
75.56
Negative
80.15
Negative
83.93
Negative
Market Momentum
-1.05
Negative
31.42
Neutral
50.66
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TXT, the sentiment is Negative. The current price of 70.19 is below the 20-day moving average (MA) of 73.33, below the 50-day MA of 75.56, and below the 200-day MA of 83.93, indicating a bearish trend. The MACD of -1.05 indicates Negative momentum. The RSI at 31.42 is Neutral, neither overbought nor oversold. The STOCH value of 50.66 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TXT.
Textron Risk Analysis
Textron disclosed 25 risk factors in its most recent earnings report. Textron reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Textron Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $67.14B | 16.37 | 27.30% | 1.70% | 4.44% | 110.33% | |
77 Outperform | $171.44B | 36.22 | 7.94% | 1.88% | 17.15% | 58.66% | |
75 Outperform | $68.68B | 18.64 | 17.14% | 2.23% | 12.88% | 13.78% | |
74 Outperform | $105.65B | 20.12 | 84.26% | 2.82% | 5.14% | -19.14% | |
64 Neutral | $12.81B | 16.21 | 11.63% | 0.11% | 0.14% | -5.38% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% | |
50 Neutral | $130.99B | ― | -162.23% | ― | -14.49% | -399.90% |
* Industrials Sector Average
Performance Comparison
TXT
Textron
70.19
-20.31
-22.44%
BA
Boeing
158.90
-42.10
-20.95%
GD
General Dynamics
250.80
-17.48
-6.52%
LMT
Lockheed Martin
448.82
26.42
6.25%
NOC
Northrop Grumman
463.83
10.56
2.33%
RTX
RTX
128.70
40.38
45.72%
Textron Earnings Call Summary
Earnings Call Date: Jan 22, 2025 | % Change Since: -13.56% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a mixed sentiment with notable achievements in backlog growth and new contracts, particularly in the Bell segment, suggesting positive future prospects. However, significant challenges were highlighted, including declines in revenue and segment profit, particularly in the Aviation and Industrial segments, as well as decreased manufacturing cash flow. The guidance for 2025 indicates optimism with projected revenue and EPS growth.Highlights
Bell Segment Revenue Growth
Bell saw a 13.7% increase in revenues for the year, driven by the expansion of the FARA program and steady commercial order activity.
Strong Backlog Growth
Aviation segment ended the year with a backlog of $7.8 billion, an increase of $676 million from 2023.
New Contracts and Certifications
Aviation secured an order for 26 Beechcraft King Air 260s and achieved type certification for the Cessna SkyCourier by Transport Canada's Civil Aviation.
Projected Revenue and EPS Growth for 2025
Textron projects revenues of about $14.7 billion, up 7% from 2024, and adjusted EPS in the range of $6 to $6.20.
Lowlights
Decline in Revenues and Segment Profit
Revenues in Q4 2024 were $3.6 billion, down from $3.9 billion in Q4 2023. Segment profit was $283 million, down $101 million from Q4 2023.
Impact of Industrial Segment Challenges
Industrial segment experienced lower revenues and operating profit, primarily due to ongoing softness in specialized vehicles end markets.
Aviation Segment Profit Decline
Aviation's segment profit was $100 million in Q4, down $93 million from 2023, due to lower volume and manufacturing inefficiencies caused by the strike.
Manufacturing Cash Flow Decrease
Manufacturing cash flow before pension contributions was $692 million for 2024, down $239 million from 2023.
Company Guidance
During the Textron Q4 2024 earnings call, guidance for 2025 was provided, highlighting expectations of revenue growth to approximately $14.7 billion, a 7% increase from 2024. The company projected adjusted earnings per share (EPS) to be between $6 and $6.20, with manufacturing cash flow before pension contributions estimated in the range of $800 million to $900 million. Segment-specific forecasts included Textron Aviation with revenues around $6.1 billion and a margin of 12% to 13%, Bell with revenues of $4 billion and a margin of 8.5% to 9.5%, and Textron Systems with revenues of $1.3 billion and a margin of 12% to 13%. The Industrial segment was expected to generate approximately $3.2 billion in revenue with a margin of 4.5% to 5.5%. Textron eAviation was projected to have revenues of $45 million, with a segment loss of $70 million due to ongoing investments in sustainable aviation solutions. The finance segment was anticipated to bring in about $25 million in profit. The company also projected an increase in research and development expenses to $500 million and capital expenditures to $425 million.Textron Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Textron Appoints Rob Mionis to Board of Directors
Positive
Feb 27, 2025
On February 26, 2025, Textron Inc. announced the election of Rob Mionis to its Board of Directors, effective March 1, 2025. Mionis, who is the President and CEO of Celestica Inc., brings extensive experience in aerospace and industrial markets, having previously held leadership roles at StandardAero and Honeywell. This strategic addition to the board is expected to enhance Textron’s capabilities in these sectors. Mionis will serve on Textron’s Audit Committee and Organization and Compensation Committee, potentially influencing the company’s governance and operational strategies.
Product-Related AnnouncementsBusiness Operations and StrategyFinancial Disclosures
Textron Restructures Amid Soft Demand for TSV Products
Negative
Dec 18, 2024
Textron Inc. is pausing production of its TSV powersports products due to soft consumer demand and is exploring strategic alternatives for this line. This decision is part of a broader restructuring plan leading to increased pretax special charges and an inventory valuation charge, impacting the company’s financials for 2024 and leading to expected completion of restructuring actions by the first half of 2025.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.