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 67 industry peers in the Aerospace & Defense industry. TXT has only an average score on both its financial health and profitability. TXT may be a bit undervalued, certainly considering the very reasonable score on growth
1. Profitability
1.1 Basic Checks
In the past year TXT was profitable.
TXT had a positive operating cash flow in the past year.
Each year in the past 5 years TXT has been profitable.
Each year in the past 5 years TXT had a positive operating cash flow.
1.2 Ratios
TXT's Return On Assets of 4.90% is fine compared to the rest of the industry. TXT outperforms 68.66% of its industry peers.
The Return On Equity of TXT (11.41%) is better than 73.13% of its industry peers.
Looking at the Return On Invested Capital, with a value of 6.12%, TXT is in line with its industry, outperforming 56.72% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for TXT is below the industry average of 8.47%.
| 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
With a decent Profit Margin value of 5.98%, TXT is doing good in the industry, outperforming 65.67% of the companies in the same industry.
In the last couple of years the Profit Margin of TXT has remained more or less at the same level.
TXT has a Operating Margin of 6.43%. This is comparable to the rest of the industry: TXT outperforms 47.76% of its industry peers.
In the last couple of years the Operating Margin of TXT has declined.
Looking at the Gross Margin, with a value of 19.12%, TXT is doing worse than 68.66% of the companies in the same industry.
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
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so 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
An Altman-Z score of 2.57 indicates that TXT is not a great score, but indicates only limited risk for bankruptcy at the moment.
With a Altman-Z score value of 2.57, TXT perfoms like the industry average, outperforming 40.30% of the companies in the same industry.
The Debt to FCF ratio of TXT is 6.88, which is on the high side as it means it would take TXT, 6.88 years of fcf income to pay off all of its debts.
TXT has a better Debt to FCF ratio (6.88) than 65.67% 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 58.21% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.46 | ||
| Debt/FCF | 6.88 | ||
| Altman-Z | 2.57 |
ROIC/WACC0.61
WACC10.03%
2.3 Liquidity
TXT has a Current Ratio of 1.66. 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 of 1.66. This is in the lower half of the industry: TXT underperforms 64.18% 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.
Looking at the Quick ratio, with a value of 0.69, TXT is doing worse than 85.07% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.66 | ||
| Quick Ratio | 0.69 |
3. Growth
3.1 Past
TXT shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -3.30%.
Measured over the past 5 years, TXT shows a small growth in Earnings Per Share. The EPS has been growing by 7.88% on average per year.
TXT shows a small growth in Revenue. In the last year, the Revenue has grown by 0.57%.
TXT shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 0.11% yearly.
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 11.09% on average per year.
TXT is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 3.74% yearly.
EPS Next Y12.89%
EPS Next 2Y12.82%
EPS Next 3Y12.27%
EPS Next 5Y11.09%
Revenue Next Year5.66%
Revenue Next 2Y5.18%
Revenue Next 3Y4.32%
Revenue Next 5Y3.74%
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
The Price/Earnings ratio is 14.13, which indicates a correct valuation of TXT.
TXT's Price/Earnings ratio is rather cheap when compared to the industry. TXT is cheaper than 98.51% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 28.05, TXT is valued a bit cheaper.
A Price/Forward Earnings ratio of 11.26 indicates a reasonable valuation of TXT.
TXT's Price/Forward Earnings ratio is rather cheap when compared to the industry. TXT is cheaper than 98.51% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of TXT to the average of the S&P500 Index (37.67), we can say TXT is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.13 | ||
| Fwd PE | 11.26 |
4.2 Price Multiples
TXT's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. TXT is cheaper than 92.54% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, TXT is valued cheaply inside the industry as 91.04% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 26.12 | ||
| EV/EBITDA | 13.18 |
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 12.27% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.1
PEG (5Y)1.79
EPS Next 2Y12.82%
EPS Next 3Y12.27%
5. Dividend
5.1 Amount
TXT has a yearly dividend return of 0.09%, which is pretty low.
TXT's Dividend Yield is a higher than the industry average which is at 1.17.
With a Dividend Yield of 0.09, TXT pays less dividend than the S&P500 average, which is at 2.32.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.09% |
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.
The dividend of TXT decreased 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 2Y12.82%
EPS Next 3Y12.27%
78.56
-0.94 (-1.18%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryAerospace & Defense
Earnings (Last)
Earnings (Next)
Inst Owners86.72%
Inst Owner Change0.46%
Ins Owners0.51%
Ins Owner Change5.66%
Market Cap14.18B
Analysts73.33
Price Target89.67 (14.14%)
Short Float %2.97%
Short Ratio3.74
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.09% |
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)1.32%
PT rev (3m)1.81%
EPS NQ rev (1m)0.98%
EPS NQ rev (3m)-2.08%
EPS NY rev (1m)-0.03%
EPS NY rev (3m)0.75%
Revenue NQ rev (1m)0.52%
Revenue NQ rev (3m)0.46%
Revenue NY rev (1m)-0.03%
Revenue NY rev (3m)0.22%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.13 | ||
| Fwd PE | 11.26 | ||
| P/S | 1.02 | ||
| P/FCF | 26.12 | ||
| P/OCF | 15.81 | ||
| P/B | 1.95 | ||
| P/tB | 2.85 | ||
| EV/EBITDA | 13.18 |
EPS(TTM)5.56
EY7.08%
EPS(NY)6.97
Fwd EY8.88%
FCF(TTM)3.01
FCFY3.83%
OCF(TTM)4.97
OCFY6.32%
SpS76.84
BVpS40.3
TBVpS27.57
PEG (NY)1.1
PEG (5Y)1.79
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 | 2.57 |
F-Score5
WACC10.03%
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)-3.3%
EPS 3Y18.42%
EPS 5Y7.88%
EPS Q2Q%6.67%
EPS Next Y12.89%
EPS Next 2Y12.82%
EPS Next 3Y12.27%
EPS Next 5Y11.09%
Revenue 1Y (TTM)0.57%
Revenue growth 3Y3.43%
Revenue growth 5Y0.11%
Sales Q2Q%5.45%
Revenue Next Year5.66%
Revenue Next 2Y5.18%
Revenue Next 3Y4.32%
Revenue Next 5Y3.74%
EBIT growth 1Y-16.17%
EBIT growth 3Y1.11%
EBIT growth 5Y-3.59%
EBIT Next Year44.72%
EBIT Next 3Y19.13%
EBIT Next 5Y11.93%
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%