For those who appreciate value investing, NYSE:TXT is a compelling option with its solid fundamentals.

Last update: Jan 1, 2024

Uncover the potential of TEXTRON INC (NYSE:TXT) as our stock screener's choice for an undervalued stock. NYSE:TXT maintains a strong financial position and offers an appealing valuation. We'll delve into the specifics below.

A Closer Look at Valuation for NYSE:TXT

ChartMill employs its own Valuation Rating system for all stocks. This score, ranging from 0 to 10, is determined by evaluating different valuation factors, including price to earnings and free cash flow, both in absolute terms and relative to the market and industry. NYSE:TXT has earned a 8 for valuation:

Based on the Price/Earnings ratio, TXT is valued cheaper than 93.75% of the companies in the same industry.
TXT's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 26.08.
Based on the Price/Forward Earnings ratio, TXT is valued cheaply inside the industry as 96.88% of the companies are valued more expensively.
Compared to an average S&P500 Price/Forward Earnings ratio of 20.99, TXT is valued a bit cheaper.
Based on the Enterprise Value to EBITDA ratio, TXT is valued cheaper than 84.38% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, TXT is valued cheaply inside the industry as 93.75% of the companies are valued more expensively.
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
TXT has a very decent profitability rating, which may justify a higher PE ratio.
TXT's earnings are expected to grow with 18.70% in the coming years. This may justify a more expensive valuation.

Profitability Assessment of NYSE:TXT

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. NYSE:TXT scores a 6 out of 10:

Looking at the Return On Assets, with a value of 5.75%, TXT is in the better half of the industry, outperforming 76.56% of the companies in the same industry.
With an excellent Return On Equity value of 13.43%, TXT belongs to the best of the industry, outperforming 81.25% of the companies in the same industry.
TXT's Return On Invested Capital of 6.66% is fine compared to the rest of the industry. TXT outperforms 70.31% of its industry peers.
The last Return On Invested Capital (6.66%) for TXT is above the 3 year average (5.11%), which is a sign of increasing profitability.
TXT has a better Profit Margin (7.07%) than 68.75% of its industry peers.
In the last couple of years the Profit Margin of TXT has grown nicely.

ChartMill's Evaluation of Health

ChartMill assigns a Health Rating to every stock. This score ranges from 0 to 10 and evaluates the different health aspects like liquidity and solvency, both absolutely, but also relative to the industry peers. NYSE:TXT scores a 5 out of 10:

With a decent Altman-Z score value of 2.80, TXT is doing good in the industry, outperforming 60.94% of the companies in the same industry.
The Debt to FCF ratio of TXT (4.12) is better than 87.50% of its industry peers.
A Debt/Equity ratio of 0.45 indicates that TXT is not too dependend on debt financing.

ChartMill's Evaluation of Growth

To evaluate a stock's growth potential, ChartMill utilizes a Growth Rating on a scale of 0 to 10. This comprehensive assessment considers various growth aspects, including historical and estimated EPS and revenue growth. NYSE:TXT has achieved a 5 out of 10:

The Earnings Per Share has grown by an impressive 30.67% 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 10.36% on average per year.
TXT is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 16.31% yearly.
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.
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.

Every day, new Decent Value stocks can be found on ChartMill in our Decent Value screener.

For an up to date full fundamental analysis you can check the fundamental report of TXT

Disclaimer

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.