TEXTRON INC (TXT) Stock Fundamental Analysis
NYSE:TXT - New York Stock Exchange, Inc. - US8832031012 - Common Stock - Currency: USD
We assign a fundamental rating of 5 out of 10 to TXT. TXT was compared to 65 industry peers in the Aerospace & Defense industry. Both the profitability and the financial health of TXT get a neutral evaluation. Nothing too spectacular is happening here. TXT may be a bit undervalued, certainly considering the very reasonable score on growth
1. Profitability
1.1 Basic Checks
TXT had positive earnings in the past year.
In the past year TXT had a positive cash flow from operations.
In the past 5 years TXT has always been profitable.
TXT had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
TXT has a better Return On Assets (4.90%) than 63.08% of its industry peers.
TXT has a better Return On Equity (11.41%) than 70.77% of its industry peers.
With a Return On Invested Capital value of 6.12%, TXT perfoms like the industry average, outperforming 56.92% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for TXT is in line with the industry average of 7.89%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.9% | ||
| ROE | 11.41% | ||
| ROIC | 6.12% |
ROA(3y)5.21%
ROA(5y)4.47%
ROE(3y)12.24%
ROE(5y)10.59%
ROIC(3y)6.46%
ROIC(5y)5.77%
1.3 Margins
TXT has a better Profit Margin (5.98%) than 64.62% of its industry peers.
TXT's Profit Margin has been stable in the last couple of years.
TXT has a Operating Margin of 6.43%. This is comparable to the rest of the industry: TXT outperforms 47.69% of its industry peers.
TXT's Operating Margin has declined in the last couple of years.
TXT has a worse Gross Margin (19.12%) than 69.23% of its industry peers.
TXT's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 6.43% | ||
| PM (TTM) | 5.98% | ||
| GM | 19.12% |
OM growth 3Y-2.25%
OM growth 5Y-3.69%
PM growth 3Y-0.06%
PM growth 5Y0.11%
GM growth 3Y3.26%
GM growth 5Y2.58%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), TXT is destroying value.
The number of shares outstanding for TXT has been reduced compared to 1 year ago.
TXT has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, TXT has an improved debt to assets ratio.
2.2 Solvency
TXT has an Altman-Z score of 2.47. This is not the best score and indicates that TXT is in the grey zone with still only limited risk for bankruptcy at the moment.
TXT's Altman-Z score of 2.47 is on the low side compared to the rest of the industry. TXT is outperformed by 60.00% of its industry peers.
TXT has a debt to FCF ratio of 6.88. This is a slightly negative value and a sign of low solvency as TXT would need 6.88 years to pay back of all of its debts.
The Debt to FCF ratio of TXT (6.88) is better than 67.69% of its industry peers.
TXT has a Debt/Equity ratio of 0.46. This is a healthy value indicating a solid balance between debt and equity.
TXT has a Debt to Equity ratio (0.46) which is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.46 | ||
| Debt/FCF | 6.88 | ||
| Altman-Z | 2.47 |
ROIC/WACC0.66
WACC9.34%
2.3 Liquidity
A Current Ratio of 1.66 indicates that TXT should not have too much problems paying its short term obligations.
TXT has a Current ratio of 1.66. This is in the lower half of the industry: TXT underperforms 63.08% of its industry peers.
TXT has a Quick Ratio of 1.66. This is a bad value and indicates that TXT is not financially healthy enough and could expect problems in meeting its short term obligations.
TXT has a worse Quick ratio (0.69) than 86.15% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.66 | ||
| Quick Ratio | 0.69 |
3. Growth
3.1 Past
The earnings per share for TXT have decreased by -3.30% in the last year.
TXT shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 7.88% yearly.
TXT shows a small growth in Revenue. In the last year, the Revenue has grown by 0.57%.
The Revenue has been growing slightly by 0.11% on average over the past years.
EPS 1Y (TTM)-3.3%
EPS 3Y18.42%
EPS 5Y7.88%
EPS Q2Q%6.67%
Revenue 1Y (TTM)0.57%
Revenue growth 3Y3.43%
Revenue growth 5Y0.11%
Sales Q2Q%5.45%
3.2 Future
Based on estimates for the next years, TXT will show a quite strong growth in Earnings Per Share. The EPS will grow by 10.21% on average per year.
The Revenue is expected to grow by 3.65% on average over the next years.
EPS Next Y12.05%
EPS Next 2Y12.63%
EPS Next 3Y12.13%
EPS Next 5Y10.21%
Revenue Next Year5.43%
Revenue Next 2Y4.97%
Revenue Next 3Y4.26%
Revenue Next 5Y3.65%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 12.66 indicates a correct valuation of TXT.
Compared to the rest of the industry, the Price/Earnings ratio of TXT indicates a rather cheap valuation: TXT is cheaper than 96.92% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 28.88, TXT is valued rather cheaply.
TXT is valuated reasonably with a Price/Forward Earnings ratio of 10.12.
Based on the Price/Forward Earnings ratio, TXT is valued cheaply inside the industry as 98.46% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 21.20. TXT is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.66 | ||
| Fwd PE | 10.12 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of TXT indicates a rather cheap valuation: TXT is cheaper than 87.69% of the companies listed in the same industry.
TXT's Price/Free Cash Flow ratio is rather cheap when compared to the industry. TXT is cheaper than 89.23% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 23.54 | ||
| EV/EBITDA | 11.89 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
TXT's earnings are expected to grow with 12.13% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.05
PEG (5Y)1.61
EPS Next 2Y12.63%
EPS Next 3Y12.13%
5. Dividend
5.1 Amount
With a yearly dividend of 0.12%, TXT is not a good candidate for dividend investing.
TXT's Dividend Yield is a higher than the industry average which is at 1.35.
With a Dividend Yield of 0.12, TXT pays less dividend than the S&P500 average, which is at 2.45.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.12% |
5.2 History
The dividend of TXT decreases each year by -4.65%.
TXT has paid a dividend for at least 10 years, which is a reliable track record.
TXT has decreased its dividend recently.
Dividend Growth(5Y)-4.65%
Div Incr Years0
Div Non Decr Years1
5.3 Sustainability
1.33% of the earnings are spent on dividend by TXT. This is a low number and sustainable payout ratio.
DP1.33%
EPS Next 2Y12.63%
EPS Next 3Y12.13%
70.37
+0.39 (+0.56%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryAerospace & Defense
Earnings (Last)
Earnings (Next)
Inst Owners87.03%
Inst Owner Change0.1%
Ins Owners0.58%
Ins Owner Change5.66%
Market Cap12.78B
Analysts73.33
Price Target88.08 (25.17%)
Short Float %2.01%
Short Ratio2.22
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.12% |
Yearly Dividend0.06
Dividend Growth(5Y)-4.65%
DP1.33%
Div Incr Years0
Div Non Decr Years1
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)6.29%
Min EPS beat(2)-0.14%
Max EPS beat(2)12.71%
EPS beat(4)2
Avg EPS beat(4)2.13%
Min EPS beat(4)-7.04%
Max EPS beat(4)12.71%
EPS beat(8)5
Avg EPS beat(8)5.21%
EPS beat(12)8
Avg EPS beat(12)5.76%
EPS beat(16)11
Avg EPS beat(16)7.31%
Revenue beat(2)1
Avg Revenue beat(2)-2.69%
Min Revenue beat(2)-6.11%
Max Revenue beat(2)0.73%
Revenue beat(4)1
Avg Revenue beat(4)-2.61%
Min Revenue beat(4)-6.11%
Max Revenue beat(4)0.73%
Revenue beat(8)1
Avg Revenue beat(8)-3.01%
Revenue beat(12)1
Avg Revenue beat(12)-3.07%
Revenue beat(16)3
Avg Revenue beat(16)-2.51%
PT rev (1m)-4.43%
PT rev (3m)-11.36%
EPS NQ rev (1m)-1.84%
EPS NQ rev (3m)-19.71%
EPS NY rev (1m)0.23%
EPS NY rev (3m)-9.42%
Revenue NQ rev (1m)0.03%
Revenue NQ rev (3m)-3.81%
Revenue NY rev (1m)-0.18%
Revenue NY rev (3m)-0.94%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.66 | ||
| Fwd PE | 10.12 | ||
| P/S | 0.92 | ||
| P/FCF | 23.54 | ||
| P/OCF | 14.25 | ||
| P/B | 1.76 | ||
| P/tB | 2.57 | ||
| EV/EBITDA | 11.89 |
EPS(TTM)5.56
EY7.9%
EPS(NY)6.95
Fwd EY9.88%
FCF(TTM)2.99
FCFY4.25%
OCF(TTM)4.94
OCFY7.02%
SpS76.38
BVpS40.06
TBVpS27.41
PEG (NY)1.05
PEG (5Y)1.61
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.9% | ||
| ROE | 11.41% | ||
| ROCE | 7.11% | ||
| ROIC | 6.12% | ||
| ROICexc | 6.8% | ||
| ROICexgc | 8.53% | ||
| OM | 6.43% | ||
| PM (TTM) | 5.98% | ||
| GM | 19.12% | ||
| FCFM | 3.91% |
ROA(3y)5.21%
ROA(5y)4.47%
ROE(3y)12.24%
ROE(5y)10.59%
ROIC(3y)6.46%
ROIC(5y)5.77%
ROICexc(3y)7.59%
ROICexc(5y)6.85%
ROICexgc(3y)9.98%
ROICexgc(5y)9.07%
ROCE(3y)7.5%
ROCE(5y)6.7%
ROICexcg growth 3Y-0.61%
ROICexcg growth 5Y-6.86%
ROICexc growth 3Y-0.39%
ROICexc growth 5Y-5.86%
OM growth 3Y-2.25%
OM growth 5Y-3.69%
PM growth 3Y-0.06%
PM growth 5Y0.11%
GM growth 3Y3.26%
GM growth 5Y2.58%
F-Score5
Asset Turnover0.82
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.46 | ||
| Debt/FCF | 6.88 | ||
| Debt/EBITDA | 2.64 | ||
| Cap/Depr | 91.71% | ||
| Cap/Sales | 2.55% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 70.19% | ||
| Profit Quality | 65.42% | ||
| Current Ratio | 1.66 | ||
| Quick Ratio | 0.69 | ||
| Altman-Z | 2.47 |
F-Score5
WACC9.34%
ROIC/WACC0.66
Cap/Depr(3y)95.41%
Cap/Depr(5y)92.69%
Cap/Sales(3y)2.78%
Cap/Sales(5y)2.82%
Profit Quality(3y)101.47%
Profit Quality(5y)122.86%
High Growth Momentum
Growth
EPS 1Y (TTM)-3.3%
EPS 3Y18.42%
EPS 5Y7.88%
EPS Q2Q%6.67%
EPS Next Y12.05%
EPS Next 2Y12.63%
EPS Next 3Y12.13%
EPS Next 5Y10.21%
Revenue 1Y (TTM)0.57%
Revenue growth 3Y3.43%
Revenue growth 5Y0.11%
Sales Q2Q%5.45%
Revenue Next Year5.43%
Revenue Next 2Y4.97%
Revenue Next 3Y4.26%
Revenue Next 5Y3.65%
EBIT growth 1Y-16.17%
EBIT growth 3Y1.11%
EBIT growth 5Y-3.59%
EBIT Next Year45.48%
EBIT Next 3Y19.54%
EBIT Next 5Y11.67%
FCF growth 1Y-47.89%
FCF growth 3Y-19%
FCF growth 5Y-0.75%
OCF growth 1Y-36.38%
OCF growth 3Y-14.07%
OCF growth 5Y0%