TEXTRON INC (TXT) Stock Fundamental Analysis
NYSE:TXT - New York Stock Exchange, Inc. - US8832031012 - Common Stock - Currency: USD
TXT gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 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. A decent growth rate in combination with a cheap valuation! Better keep an eye on TXT.
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
The Return On Assets of TXT (4.90%) is better than 69.23% of its industry peers.
TXT has a better Return On Equity (11.41%) than 72.31% of its industry peers.
The Return On Invested Capital of TXT (6.12%) is comparable to the rest of the industry.
Measured over the past 3 years, the Average Return On Invested Capital for TXT is in line with the industry average of 8.44%.
| 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
Looking at the Profit Margin, with a value of 5.98%, TXT is in the better half of the industry, outperforming 63.08% of the companies in the same industry.
TXT's Profit Margin has been stable in the last couple of years.
TXT has a Operating Margin (6.43%) which is comparable to the rest of the industry.
TXT's Operating Margin has declined in the last couple of years.
Looking at the Gross Margin, with a value of 19.12%, TXT is doing worse than 69.23% 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.
Compared to 1 year ago, TXT has less shares outstanding
Compared to 5 years ago, TXT has less shares outstanding
Compared to 1 year ago, TXT has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 2.59 indicates that TXT is not a great score, but indicates only limited risk for bankruptcy at the moment.
TXT's Altman-Z score of 2.59 is in line compared to the rest of the industry. TXT outperforms 41.54% of its industry peers.
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.
With a decent Debt to FCF ratio value of 6.88, TXT is doing good in the industry, outperforming 64.62% of the companies in the same industry.
TXT has a Debt/Equity ratio of 0.46. This is a healthy value indicating a solid balance between debt and equity.
The Debt to Equity ratio of TXT (0.46) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.46 | ||
| Debt/FCF | 6.88 | ||
| Altman-Z | 2.59 |
ROIC/WACC0.63
WACC9.73%
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 worse Current ratio (1.66) than 64.62% of its industry peers.
A Quick Ratio of 0.69 indicates that TXT may have some problems paying 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%.
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.
The Revenue is expected to grow by 3.74% on average over the next years.
EPS Next Y12.93%
EPS Next 2Y12.86%
EPS Next 3Y12.34%
EPS Next 5Y11.09%
Revenue Next Year5.69%
Revenue Next 2Y5.19%
Revenue Next 3Y4.33%
Revenue Next 5Y3.74%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
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
Based on the Price/Earnings ratio of 14.74, the valuation of TXT can be described as correct.
98.46% of the companies in the same industry are more expensive than TXT, based on the Price/Earnings ratio.
Compared to an average S&P500 Price/Earnings ratio of 27.28, TXT is valued a bit cheaper.
With a Price/Forward Earnings ratio of 11.74, the valuation of TXT can be described as very reasonable.
Based on the Price/Forward Earnings ratio, TXT is valued cheaply inside the industry as 98.46% of the companies are valued more expensively.
When comparing the Price/Forward Earnings ratio of TXT to the average of the S&P500 Index (21.76), we can say TXT is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.74 | ||
| Fwd PE | 11.74 |
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 92.31% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, TXT is valued cheaper than 87.69% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 27.24 | ||
| EV/EBITDA | 13.39 |
4.3 Compensation for Growth
TXT's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
A more expensive valuation may be justified as TXT's earnings are expected to grow with 12.34% in the coming years.
PEG (NY)1.14
PEG (5Y)1.87
EPS Next 2Y12.86%
EPS Next 3Y12.34%
5. Dividend
5.1 Amount
With a yearly dividend of 0.10%, TXT is not a good candidate for dividend investing.
TXT's Dividend Yield is a higher than the industry average which is at 1.27.
With a Dividend Yield of 0.10, TXT pays less dividend than the S&P500 average, which is at 2.42.
| 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.
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 2Y12.86%
EPS Next 3Y12.34%
81.94
+0.96 (+1.19%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryAerospace & Defense
Earnings (Last)
Earnings (Next)
Inst Owners86.72%
Inst Owner Change-1.52%
Ins Owners0.51%
Ins Owner Change5.66%
Market Cap14.79B
Analysts73.33
Price Target88.51 (8.02%)
Short Float %2.83%
Short Ratio3.37
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.1% |
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)2.89%
PT rev (3m)-3.96%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-1.32%
EPS NY rev (1m)0.01%
EPS NY rev (3m)1.02%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-0.03%
Revenue NY rev (1m)-0.01%
Revenue NY rev (3m)0.07%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.74 | ||
| Fwd PE | 11.74 | ||
| P/S | 1.07 | ||
| P/FCF | 27.24 | ||
| P/OCF | 16.49 | ||
| P/B | 2.03 | ||
| P/tB | 2.97 | ||
| EV/EBITDA | 13.39 |
EPS(TTM)5.56
EY6.79%
EPS(NY)6.98
Fwd EY8.52%
FCF(TTM)3.01
FCFY3.67%
OCF(TTM)4.97
OCFY6.06%
SpS76.84
BVpS40.3
TBVpS27.57
PEG (NY)1.14
PEG (5Y)1.87
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 | 2.59 |
F-Score5
WACC9.73%
ROIC/WACC0.63
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 Y12.93%
EPS Next 2Y12.86%
EPS Next 3Y12.34%
EPS Next 5Y11.09%
Revenue 1Y (TTM)0.57%
Revenue growth 3Y3.43%
Revenue growth 5Y0.11%
Sales Q2Q%5.45%
Revenue Next Year5.69%
Revenue Next 2Y5.19%
Revenue Next 3Y4.33%
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%