TEXTRON INC (TXT)
US8832031012 - Common Stock
We assign a fundamental rating of 5 out of 10 to TXT. TXT was compared to 66 industry peers in the Aerospace & Defense industry. TXT has a medium profitability rating, but doesn't score so well on its financial health evaluation. TXT scores decently on growth, while it is valued quite cheap. This could make an interesting combination.
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.
TXT had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
The Return On Assets of TXT (5.64%) is better than 68.18% of its industry peers.
Looking at the Return On Equity, with a value of 13.53%, TXT is in the better half of the industry, outperforming 77.27% of the companies in the same industry.
The Return On Invested Capital of TXT (7.55%) is better than 74.24% of its industry peers.
The Average Return On Invested Capital over the past 3 years for TXT is in line with the industry average of 8.05%.
The last Return On Invested Capital (7.55%) for TXT is above the 3 year average (6.26%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.64% | ||
| ROE | 13.53% | ||
| ROIC | 7.55% |
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
TXT's Profit Margin of 6.67% is fine compared to the rest of the industry. TXT outperforms 68.18% of its industry peers.
TXT's Profit Margin has declined in the last couple of years.
The Operating Margin of TXT (7.66%) is better than 60.61% of its industry peers.
In the last couple of years the Operating Margin of TXT has remained more or less at the same level.
Looking at the Gross Margin, with a value of 12.69%, TXT is doing worse than 75.76% of the companies in the same industry.
In the last couple of years the Gross Margin of TXT has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 7.66% | ||
| PM (TTM) | 6.67% | ||
| GM | 12.69% |
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%
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.
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 a worse debt to assets ratio.
2.2 Solvency
TXT has a debt to FCF ratio of 4.74. This is a neutral value as TXT would need 4.74 years to pay back of all of its debts.
TXT's Debt to FCF ratio of 4.74 is fine compared to the rest of the industry. TXT outperforms 74.24% of its industry peers.
TXT has a Debt/Equity ratio of 0.48. This is a healthy value indicating a solid balance between debt and equity.
With a Debt to Equity ratio value of 0.48, TXT perfoms like the industry average, outperforming 53.03% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.48 | ||
| Debt/FCF | 4.74 | ||
| Altman-Z | N/A |
ROIC/WACC0.93
WACC8.09%
2.3 Liquidity
TXT has a Current Ratio of 1.64. 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 (1.64) is comparable to the rest of the industry.
A Quick Ratio of 0.66 indicates that TXT may have some problems paying its short term obligations.
TXT's Quick ratio of 0.66 is on the low side compared to the rest of the industry. TXT is outperformed by 83.33% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.64 | ||
| Quick Ratio | 0.66 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 25.65% over the past year.
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.
The Revenue has been growing slightly by 5.58% in the past year.
The Revenue has been decreasing by -0.42% on average over the past years.
EPS 1Y (TTM)25.65%
EPS 3Y39.34%
EPS 5Y10.82%
EPS Q2Q%5.48%
Revenue 1Y (TTM)5.58%
Revenue growth 3Y5.5%
Revenue growth 5Y-0.42%
Sales Q2Q%3.01%
3.2 Future
TXT is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 10.83% yearly.
TXT is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.93% yearly.
EPS Next Y13.74%
EPS Next 2Y11.43%
EPS Next 3Y10.47%
EPS Next 5Y10.83%
Revenue Next Year5.63%
Revenue Next 2Y5.38%
Revenue Next 3Y4.63%
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.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 15.79, which indicates a correct valuation of TXT.
Based on the Price/Earnings ratio, TXT is valued cheaper than 90.91% of the companies in the same industry.
TXT is valuated rather cheaply when we compare the Price/Earnings ratio to 24.41, which is the current average of the S&P500 Index.
TXT is valuated correctly with a Price/Forward Earnings ratio of 13.24.
Compared to the rest of the industry, the Price/Forward Earnings ratio of TXT indicates a rather cheap valuation: TXT is cheaper than 93.94% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of TXT to the average of the S&P500 Index (20.59), we can say TXT is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.79 | ||
| Fwd PE | 13.24 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, TXT is valued cheaper than 81.82% of the companies in the same industry.
89.39% of the companies in the same industry are more expensive than TXT, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 22.8 | ||
| EV/EBITDA | 13.64 |
4.3 Compensation for Growth
The 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)1.15
PEG (5Y)1.46
EPS Next 2Y11.43%
EPS Next 3Y10.47%
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 1.26, TXT pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.30, TXT's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.09% |
5.2 History
The dividend of TXT has a limited annual growth rate of 0.18%.
TXT has paid a dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)0.18%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
TXT pays out 1.73% of its income as dividend. This is a sustainable payout ratio.
TXT's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP1.73%
EPS Next 2Y11.43%
EPS Next 3Y10.47%
TEXTRON INC
NYSE:TXT (7/26/2024, 7:04:06 PM)
After market: 91.5 -0.56 (-0.61%)92.06
+0.77 (+0.84%)
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 Cap17.56B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.09% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
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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)
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Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.79 | ||
| Fwd PE | 13.24 | ||
| 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)1.15
PEG (5Y)1.46
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.64% | ||
| ROE | 13.53% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 7.66% | ||
| PM (TTM) | 6.67% | ||
| GM | 12.69% | ||
| 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 Turnover0.85
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.48 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.64 | ||
| Quick Ratio | 0.66 | ||
| 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)25.65%
EPS 3Y39.34%
EPS 5Y
EPS Q2Q%
EPS Next Y13.74%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)5.58%
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