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 68 industry peers in the Aerospace & Defense industry. TXT has an average financial health and profitability rating. TXT is valued quite cheap, while showing a decent growth score. This is a good combination!
1. Profitability
1.1 Basic Checks
In the past year TXT was profitable.
TXT had a positive operating cash flow in the past year.
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
With a decent Return On Assets value of 4.78%, TXT is doing good in the industry, outperforming 66.18% of the companies in the same industry.
TXT's Return On Equity of 10.98% is fine compared to the rest of the industry. TXT outperforms 73.53% of its industry peers.
TXT has a Return On Invested Capital (5.87%) which is comparable to the rest of the industry.
The Average Return On Invested Capital over the past 3 years for TXT is below the industry average of 8.59%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.78% | ||
| ROE | 10.98% | ||
| ROIC | 5.87% |
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
The Profit Margin of TXT (5.80%) is better than 64.71% of its industry peers.
In the last couple of years the Profit Margin of TXT has remained more or less at the same level.
Looking at the Operating Margin, with a value of 6.16%, TXT is in line with its industry, outperforming 50.00% of the companies in the same industry.
In the last couple of years the Operating Margin of TXT has declined.
The Gross Margin of TXT (19.73%) is worse than 64.71% of its industry peers.
TXT's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 6.16% | ||
| PM (TTM) | 5.8% | ||
| GM | 19.73% |
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
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so TXT is destroying value.
Compared to 1 year ago, TXT has less shares outstanding
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 2.58. 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.
With a Altman-Z score value of 2.58, TXT perfoms like the industry average, outperforming 41.18% of the companies in the same industry.
The Debt to FCF ratio of TXT is 6.68, which is on the high side as it means it would take TXT, 6.68 years of fcf income to pay off all of its debts.
TXT has a better Debt to FCF ratio (6.68) than 66.18% of its industry peers.
A Debt/Equity ratio of 0.45 indicates that TXT is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.45, TXT is in line with its industry, outperforming 57.35% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.45 | ||
| Debt/FCF | 6.68 | ||
| Altman-Z | 2.58 |
ROIC/WACC0.61
WACC9.64%
2.3 Liquidity
TXT has a Current Ratio of 1.70. This is a normal value and indicates that TXT is financially healthy and should not expect problems in meeting its short term obligations.
The Current ratio of TXT (1.70) is worse than 60.29% of its industry peers.
A Quick Ratio of 0.71 indicates that TXT may have some problems paying its short term obligations.
TXT has a worse Quick ratio (0.71) than 80.88% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.7 | ||
| Quick Ratio | 0.71 |
3. Growth
3.1 Past
The earnings per share for TXT have decreased by -4.46% in the last year.
The Earnings Per Share has been growing slightly by 7.88% on average over the past years.
Looking at the last year, TXT shows a small growth in Revenue. The Revenue has grown by 1.19% in the last year.
Measured over the past years, TXT shows a small growth in Revenue. The Revenue has been growing by 0.11% on average per year.
EPS 1Y (TTM)-4.46%
EPS 3Y18.42%
EPS 5Y7.88%
EPS Q2Q%0.65%
Revenue 1Y (TTM)1.19%
Revenue growth 3Y3.43%
Revenue growth 5Y0.11%
Sales Q2Q%5.36%
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 10.97% on average per year.
Based on estimates for the next years, TXT will show a small growth in Revenue. The Revenue will grow by 3.86% on average per year.
EPS Next Y12.89%
EPS Next 2Y12.82%
EPS Next 3Y12.27%
EPS Next 5Y10.97%
Revenue Next Year6.58%
Revenue Next 2Y5.57%
Revenue Next 3Y4.83%
Revenue Next 5Y3.86%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 14.20, the valuation of TXT can be described as correct.
98.53% of the companies in the same industry are more expensive than TXT, based on the Price/Earnings ratio.
TXT's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 26.82.
With a Price/Forward Earnings ratio of 11.34, the valuation of TXT can be described as very reasonable.
Based on the Price/Forward Earnings ratio, TXT is valued cheaper than 100.00% of the companies in the same industry.
TXT's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 35.24.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.2 | ||
| Fwd PE | 11.34 |
4.2 Price Multiples
TXT's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. TXT is cheaper than 92.65% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of TXT indicates a rather cheap valuation: TXT is cheaper than 89.71% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 25.21 | ||
| EV/EBITDA | 12.99 |
4.3 Compensation for Growth
TXT's 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 12.27% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.1
PEG (5Y)1.8
EPS Next 2Y12.82%
EPS Next 3Y12.27%
5. Dividend
5.1 Amount
TXT has a yearly dividend return of 0.10%, which is pretty low.
Compared to an average industry Dividend Yield of 1.19, TXT pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.36, TXT's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.1% |
5.2 History
The dividend of TXT decreases each year by -4.65%.
TXT has been paying a dividend for at least 10 years, so it has a reliable track record.
The dividend of TXT decreased recently.
Dividend Growth(5Y)-4.65%
Div Incr Years0
Div Non Decr Years1
5.3 Sustainability
1.35% of the earnings are spent on dividend by TXT. This is a low number and sustainable payout ratio.
DP1.35%
EPS Next 2Y12.82%
EPS Next 3Y12.27%
79.07
+0.18 (+0.23%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryAerospace & Defense
Earnings (Last)
Earnings (Next)
Inst Owners87.72%
Inst Owner Change1.89%
Ins Owners0.52%
Ins Owner Change5.61%
Market Cap14.09B
Analysts73.33
Price Target93.75 (18.57%)
Short Float %2.72%
Short Ratio2.89
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.1% |
Yearly Dividend0.06
Dividend Growth(5Y)-4.65%
DP1.35%
Div Incr Years0
Div Non Decr Years1
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)9.58%
Min EPS beat(2)6.44%
Max EPS beat(2)12.71%
EPS beat(4)2
Avg EPS beat(4)2.99%
Min EPS beat(4)-7.04%
Max EPS beat(4)12.71%
EPS beat(8)5
Avg EPS beat(8)3.61%
EPS beat(12)8
Avg EPS beat(12)5.28%
EPS beat(16)11
Avg EPS beat(16)6.29%
Revenue beat(2)2
Avg Revenue beat(2)0.94%
Min Revenue beat(2)0.73%
Max Revenue beat(2)1.14%
Revenue beat(4)2
Avg Revenue beat(4)-1.86%
Min Revenue beat(4)-6.11%
Max Revenue beat(4)1.14%
Revenue beat(8)2
Avg Revenue beat(8)-2.79%
Revenue beat(12)2
Avg Revenue beat(12)-2.71%
Revenue beat(16)3
Avg Revenue beat(16)-2.85%
PT rev (1m)4.55%
PT rev (3m)8.99%
EPS NQ rev (1m)-7.32%
EPS NQ rev (3m)-8.34%
EPS NY rev (1m)0%
EPS NY rev (3m)-0.03%
Revenue NQ rev (1m)-0.13%
Revenue NQ rev (3m)-0.11%
Revenue NY rev (1m)0.87%
Revenue NY rev (3m)0.83%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.2 | ||
| Fwd PE | 11.34 | ||
| P/S | 1 | ||
| P/FCF | 25.21 | ||
| P/OCF | 15.37 | ||
| P/B | 1.9 | ||
| P/tB | 2.76 | ||
| EV/EBITDA | 12.99 |
EPS(TTM)5.57
EY7.04%
EPS(NY)6.97
Fwd EY8.82%
FCF(TTM)3.14
FCFY3.97%
OCF(TTM)5.15
OCFY6.51%
SpS78.91
BVpS41.71
TBVpS28.7
PEG (NY)1.1
PEG (5Y)1.8
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.78% | ||
| ROE | 10.98% | ||
| ROCE | 6.81% | ||
| ROIC | 5.87% | ||
| ROICexc | 6.61% | ||
| ROICexgc | 8.32% | ||
| OM | 6.16% | ||
| PM (TTM) | 5.8% | ||
| GM | 19.73% | ||
| FCFM | 3.98% |
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-Score6
Asset Turnover0.82
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.45 | ||
| Debt/FCF | 6.68 | ||
| Debt/EBITDA | 2.68 | ||
| Cap/Depr | 90.4% | ||
| Cap/Sales | 2.55% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 72.66% | ||
| Profit Quality | 68.5% | ||
| Current Ratio | 1.7 | ||
| Quick Ratio | 0.71 | ||
| Altman-Z | 2.58 |
F-Score6
WACC9.64%
ROIC/WACC0.61
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)-4.46%
EPS 3Y18.42%
EPS 5Y7.88%
EPS Q2Q%0.65%
EPS Next Y12.89%
EPS Next 2Y12.82%
EPS Next 3Y12.27%
EPS Next 5Y10.97%
Revenue 1Y (TTM)1.19%
Revenue growth 3Y3.43%
Revenue growth 5Y0.11%
Sales Q2Q%5.36%
Revenue Next Year6.58%
Revenue Next 2Y5.57%
Revenue Next 3Y4.83%
Revenue Next 5Y3.86%
EBIT growth 1Y-19.07%
EBIT growth 3Y1.11%
EBIT growth 5Y-3.59%
EBIT Next Year50.55%
EBIT Next 3Y20.02%
EBIT Next 5Y12.03%
FCF growth 1Y-41.1%
FCF growth 3Y-19%
FCF growth 5Y-0.75%
OCF growth 1Y-31.26%
OCF growth 3Y-14.07%
OCF growth 5Y0%