TXT gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 73 industry peers in the Aerospace & Defense industry. While TXT is still in line with the averages on profitability rating, there are concerns on its financial health. TXT has a decent growth rate and is not valued too expensively.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

TXT had positive earnings in the past year.
TXT had a positive operating cash flow in the past year.
TXT had positive earnings in 4 of the past 5 years.
TXT had a positive operating cash flow in 4 of the past 5 years.

1.2 Ratios

TXT has a better Return On Assets (4.76%) than 68.49% of its industry peers.
With a decent Return On Equity value of 11.04%, TXT is doing good in the industry, outperforming 69.86% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 6.29%, TXT is in line with its industry, outperforming 54.79% 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 8.55%.

		Industry Rank	Sector Rank
ROA	4.76%
ROE	11.04%
ROIC	6.29%

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

TXT has a Profit Margin of 5.81%. This is in the better half of the industry: TXT outperforms 61.64% of its industry peers.
In the last couple of years the Profit Margin of TXT has remained more or less at the same level.
The Operating Margin of TXT (6.57%) is comparable to the rest of the industry.
TXT's Operating Margin has declined in the last couple of years.
TXT's Gross Margin of 20.62% is in line compared to the rest of the industry. TXT outperforms 41.10% of its industry peers.
In the last couple of years the Gross Margin of TXT has grown nicely.

		Industry Rank	Sector Rank
OM	6.57%
PM (TTM)	5.81%
GM	20.62%

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%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), TXT is destroying value.
TXT has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.

2.2 Solvency

An Altman-Z score of 2.67 indicates that TXT is not a great score, but indicates only limited risk for bankruptcy at the moment.
TXT has a Altman-Z score of 2.67. This is in the lower half of the industry: TXT underperforms 65.75% of its industry peers.
TXT has a debt to FCF ratio of 5.37. This is a neutral value as TXT would need 5.37 years to pay back of all of its debts.
The Debt to FCF ratio of TXT (5.37) is better than 65.75% of its industry peers.
A Debt/Equity ratio of 0.45 indicates that TXT is not too dependend on debt financing.
TXT has a Debt to Equity ratio (0.45) which is comparable to the rest of the industry.

		Industry Rank	Sector Rank
Debt/Equity	0.45
Debt/FCF	5.37
Altman-Z	2.67

ROIC/WACC0.64

WACC9.77%

2.3 Liquidity

TXT has a Current Ratio of 1.71. This is a normal value and indicates that TXT is financially healthy and should not expect problems in meeting its short term obligations.
With a Current ratio value of 1.71, TXT is not doing good in the industry: 65.75% of the companies in the same industry are doing better.
A Quick Ratio of 0.73 indicates that TXT may have some problems paying its short term obligations.
TXT's Quick ratio of 0.73 is on the low side compared to the rest of the industry. TXT is outperformed by 83.56% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	1.71
Quick Ratio	0.73

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has grown by an nice 11.50% over the past year.
Measured over the past years, TXT shows a very strong growth in Earnings Per Share. The EPS has been growing by 24.17% on average per year.

EPS 1Y (TTM)11.5%

EPS 3Y15.07%

EPS 5Y24.17%

EPS Q2Q%29.1%

Revenue 1Y (TTM)N/A

Revenue growth 3YN/A

Revenue growth 5YN/A

Sales Q2Q%15.55%

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 11.68% on average per year.
Based on estimates for the next years, TXT will show a small growth in Revenue. The Revenue will grow by 3.21% on average per year.

EPS Next Y12.69%

EPS Next 2Y12.1%

EPS Next 3Y10.91%

EPS Next 5Y11.68%

Revenue Next Year5.26%

Revenue Next 2Y4.58%

Revenue Next 3Y3.55%

Revenue Next 5Y3.21%

3.3 Evolution

Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.

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4. Valuation

4.1 Price/Earnings Ratio

TXT is valuated correctly with a Price/Earnings ratio of 14.41.
Based on the Price/Earnings ratio, TXT is valued cheaper than 98.63% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 28.30, TXT is valued a bit cheaper.
The Price/Forward Earnings ratio is 12.79, which indicates a correct valuation of TXT.
98.63% of the companies in the same industry are more expensive than TXT, based on the Price/Forward Earnings ratio.
TXT is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 25.57, which is the current average of the S&P500 Index.

		Industry Rank	Sector Rank
PE	14.41
Fwd PE	12.79

4.2 Price Multiples

TXT's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. TXT is cheaper than 93.15% of the companies in the same industry.
TXT's Price/Free Cash Flow ratio is rather cheap when compared to the industry. TXT is cheaper than 97.26% of the companies in the same industry.

		Industry Rank	Sector Rank
P/FCF	22.33
EV/EBITDA	13.36

4.3 Compensation for Growth

TXT's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.

PEG (NY)1.14

PEG (5Y)0.6

EPS Next 2Y12.1%

EPS Next 3Y10.91%

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5. Dividend

5.1 Amount

With a yearly dividend of 0.09%, TXT is not a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 0.34, 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 1.83.

		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

TXT pays out 1.81% of its income as dividend. This is a sustainable payout ratio.

DP1.81%

EPS Next 2Y12.1%

EPS Next 3Y10.91%

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TEXTRON INC / TXT FAQ

Can you provide the ChartMill fundamental rating for TEXTRON INC?

ChartMill assigns a fundamental rating of 4 / 10 to TXT.

Can you provide the valuation status for TEXTRON INC?

ChartMill assigns a valuation rating of 6 / 10 to TEXTRON INC (TXT). This can be considered as Fairly Valued.

Can you provide the profitability details for TEXTRON INC?

TEXTRON INC (TXT) has a profitability rating of 5 / 10.

What are the PE and PB ratios of TEXTRON INC (TXT) stock?

The Price/Earnings (PE) ratio for TEXTRON INC (TXT) is 14.41 and the Price/Book (PB) ratio is 2.07.

Can you provide the financial health for TXT stock?

The financial health rating of TEXTRON INC (TXT) is 3 / 10.