TEXTRON INC (TXT)

US8832031012 - Common Stock

88.63  +0.88 (+1%)

After market: 88.63 0 (0%)

Fundamental Rating

5

TXT gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 65 industry peers in the Aerospace & Defense industry. TXT has only an average score on both its financial health and profitability. TXT scores decently on growth, while it is valued quite cheap. This could make an interesting combination.



6

1. Profitability

1.1 Basic Checks

In the past year TXT was profitable.
In the past year TXT had a positive cash flow from operations.
TXT had positive earnings in each of the past 5 years.
Each year in the past 5 years TXT had a positive operating cash flow.

1.2 Ratios

TXT has a Return On Assets of 5.67%. This is in the better half of the industry: TXT outperforms 69.23% of its industry peers.
Looking at the Return On Equity, with a value of 13.43%, TXT is in the better half of the industry, outperforming 76.92% of the companies in the same industry.
TXT has a Return On Invested Capital of 7.51%. This is in the better half of the industry: TXT outperforms 72.31% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for TXT is below the industry average of 8.66%.
The 3 year average ROIC (6.26%) for TXT is below the current ROIC(7.51%), indicating increased profibility in the last year.
Industry RankSector Rank
ROA 5.67%
ROE 13.43%
ROIC 7.51%
ROA(3y)5.15%
ROA(5y)4.58%
ROE(3y)12.08%
ROE(5y)11.26%
ROIC(3y)6.26%
ROIC(5y)6.09%

1.3 Margins

Looking at the Profit Margin, with a value of 6.75%, TXT is in the better half of the industry, outperforming 70.77% of the companies in the same industry.
TXT's Profit Margin has declined in the last couple of years.
The Operating Margin of TXT (7.71%) is better than 61.54% of its industry peers.
In the last couple of years the Operating Margin of TXT has remained more or less at the same level.
The Gross Margin of TXT (14.69%) is worse than 70.77% of its industry peers.
In the last couple of years the Gross Margin of TXT has declined.
Industry RankSector Rank
OM 7.71%
PM (TTM) 6.75%
GM 14.69%
OM growth 3Y19.96%
OM growth 5Y-0.79%
PM growth 3Y36.4%
PM growth 5Y-5.1%
GM growth 3Y-12.62%
GM growth 5Y-12.13%

4

2. Health

2.1 Basic Checks

TXT has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
Compared to 1 year ago, TXT has less shares outstanding
The number of shares outstanding for TXT has been reduced compared to 5 years ago.
TXT has a worse debt/assets ratio than last year.

2.2 Solvency

TXT has an Altman-Z score of 2.85. 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 has a Altman-Z score (2.85) which is comparable to the rest of the industry.
TXT has a debt to FCF ratio of 5.10. This is a neutral value as TXT would need 5.10 years to pay back of all of its debts.
The Debt to FCF ratio of TXT (5.10) is better than 73.85% of its industry peers.
A Debt/Equity ratio of 0.46 indicates that TXT is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.46, TXT is in line with its industry, outperforming 52.31% of the companies in the same industry.
Industry RankSector Rank
Debt/Equity 0.46
Debt/FCF 5.1
Altman-Z 2.85
ROIC/WACC0.87
WACC8.61%

2.3 Liquidity

TXT has a Current Ratio of 1.68. This is a normal value and indicates that TXT is financially healthy and should not expect problems in meeting its short term obligations.
TXT has a Current ratio (1.68) which is in line with its industry peers.
TXT has a Quick Ratio of 1.68. This is a bad value and indicates that TXT is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 0.71, TXT is doing worse than 80.00% of the companies in the same industry.
Industry RankSector Rank
Current Ratio 1.68
Quick Ratio 0.71

5

3. Growth

3.1 Past

TXT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 37.56%, which is quite impressive.
Measured over the past years, TXT shows a quite strong growth in Earnings Per Share. The EPS has been growing by 10.82% on average per year.
Looking at the last year, TXT shows a small growth in Revenue. The Revenue has grown by 7.00% in the last year.
Measured over the past years, TXT shows a decrease in Revenue. The Revenue has been decreasing by -0.42% on average per year.
EPS 1Y (TTM)37.56%
EPS 3Y39.34%
EPS 5Y10.82%
EPS Q2Q%14.29%
Revenue 1Y (TTM)7%
Revenue growth 3Y5.5%
Revenue growth 5Y-0.42%
Sales Q2Q%3.67%

3.2 Future

The Earnings Per Share is expected to grow by 10.83% on average over the next years. This is quite good.
TXT is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.93% yearly.
EPS Next Y13.82%
EPS Next 2Y10.66%
EPS Next 3Y10.69%
EPS Next 5Y10.83%
Revenue Next Year6.86%
Revenue Next 2Y5.84%
Revenue Next 3Y5.08%
Revenue Next 5Y4.93%

3.3 Evolution

The EPS growth rate is stable: in the next years the growth will be about the same 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.

7

4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 15.41, the valuation of TXT can be described as correct.
Compared to the rest of the industry, the Price/Earnings ratio of TXT indicates a rather cheap valuation: TXT is cheaper than 90.77% of the companies listed in the same industry.
TXT is valuated rather cheaply when we compare the Price/Earnings ratio to 28.24, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 12.92, which indicates a correct valuation of TXT.
Based on the Price/Forward Earnings ratio, TXT is valued cheaply inside the industry as 95.38% of the companies are valued more expensively.
TXT is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 19.93, which is the current average of the S&P500 Index.
Industry RankSector Rank
PE 15.41
Fwd PE 12.92

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 83.08% of the companies listed 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 81.54% of the companies listed in the same industry.
Industry RankSector Rank
P/FCF 24.5
EV/EBITDA 12.91

4.3 Compensation for Growth

TXT's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The decent profitability rating of TXT may justify a higher PE ratio.
PEG (NY)1.12
PEG (5Y)1.42
EPS Next 2Y10.66%
EPS Next 3Y10.69%

5

5. Dividend

5.1 Amount

TXT has a yearly dividend return of 0.09%, which is pretty low.
Compared to an average industry Dividend Yield of 1.29, TXT pays a bit more dividend than its industry peers.
With a Dividend Yield of 0.09, TXT pays less dividend than the S&P500 average, which is at 2.32.
Industry RankSector Rank
Dividend Yield 0.09%

5.2 History

The dividend of TXT has a limited annual growth rate of 0.18%.
TXT has been paying a dividend for at least 10 years, so it has a reliable track record.
Dividend Growth(5Y)0.18%
Div Incr Years0
Div Non Decr Years0

5.3 Sustainability

1.72% of the earnings are spent on dividend by TXT. This is a low number and sustainable payout ratio.
The dividend of TXT is growing, but earnings are growing more, so the dividend growth is sustainable.
DP1.72%
EPS Next 2Y10.66%
EPS Next 3Y10.69%

TEXTRON INC

NYSE:TXT (5/24/2024, 7:04:00 PM)

After market: 88.63 0 (0%)

88.63

+0.88 (+1%)

Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryAerospace & Defense
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap16.90B
Analysts
Price Target
Dividend
Industry RankSector Rank
Dividend Yield 0.09%
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
Avg EPS beat(2)
Min EPS beat(2)
Max EPS beat(2)
EPS beat(4)
Avg EPS beat(4)
Min EPS beat(4)
Max EPS beat(4)
EPS beat(8)
Avg EPS beat(8)
EPS beat(12)
Avg EPS beat(12)
EPS beat(16)
Avg EPS beat(16)
Revenue beat(2)
Avg Revenue beat(2)
Min Revenue beat(2)
Max Revenue beat(2)
Revenue beat(4)
Avg Revenue beat(4)
Min Revenue beat(4)
Max Revenue beat(4)
Revenue beat(8)
Avg Revenue beat(8)
Revenue beat(12)
Avg Revenue beat(12)
Revenue beat(16)
Avg Revenue beat(16)
PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
Industry RankSector Rank
PE 15.41
Fwd PE 12.92
P/S
P/FCF
P/OCF
P/B
P/tB
EV/EBITDA
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)1.12
PEG (5Y)1.42
Profitability
Industry RankSector Rank
ROA 5.67%
ROE 13.43%
ROCE
ROIC
ROICexc
ROICexgc
OM 7.71%
PM (TTM) 6.75%
GM 14.69%
FCFM
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.84
Health
Industry RankSector Rank
Debt/Equity 0.46
Debt/FCF
Debt/EBITDA
Cap/Depr
Cap/Sales
Interest Coverage
Cash Conversion
Profit Quality
Current Ratio 1.68
Quick Ratio 0.71
Altman-Z
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
High Growth Momentum
Growth
EPS 1Y (TTM)37.56%
EPS 3Y39.34%
EPS 5Y
EPS Q2Q%
EPS Next Y13.82%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)7%
Revenue growth 3Y5.5%
Revenue growth 5Y
Sales Q2Q%
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y