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 64 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.
TXT had positive earnings in each of the past 5 years.
Each year in the past 5 years TXT had a positive operating cash flow.
1.2 Ratios
Looking at the Return On Assets, with a value of 4.89%, TXT is in the better half of the industry, outperforming 64.06% of the companies in the same industry.
TXT has a better Return On Equity (11.44%) than 71.88% of its industry peers.
The Return On Invested Capital of TXT (6.18%) is comparable to the rest of the industry.
TXT had an Average Return On Invested Capital over the past 3 years of 6.46%. This is in line with the industry average of 7.79%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.89% | ||
| ROE | 11.44% | ||
| ROIC | 6.18% |
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 6.01%, TXT is in the better half of the industry, outperforming 64.06% 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 (6.52%) which is in line with its industry peers.
TXT's Operating Margin has declined in the last couple of years.
With a Gross Margin value of 18.54%, TXT is not doing good in the industry: 68.75% of the companies in the same industry are doing better.
In the last couple of years the Gross Margin of TXT has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 6.52% | ||
| PM (TTM) | 6.01% | ||
| GM | 18.54% |
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 2.40 indicates that TXT is not a great score, but indicates only limited risk for bankruptcy at the moment.
TXT has a Altman-Z score (2.40) which is in line with its industry peers.
The Debt to FCF ratio of TXT is 5.52, which is a neutral value as it means it would take TXT, 5.52 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of TXT (5.52) is better than 70.31% of its industry peers.
A Debt/Equity ratio of 0.45 indicates that TXT is not too dependend on debt financing.
TXT's Debt to Equity ratio of 0.45 is in line compared to the rest of the industry. TXT outperforms 57.81% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.45 | ||
| Debt/FCF | 5.52 | ||
| Altman-Z | 2.4 |
ROIC/WACC0.67
WACC9.28%
2.3 Liquidity
A Current Ratio of 1.63 indicates that TXT should not have too much problems paying its short term obligations.
TXT has a worse Current ratio (1.63) than 64.06% of its industry peers.
TXT has a Quick Ratio of 1.63. This is a bad value and indicates that TXT is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Quick ratio value of 0.70, TXT is not doing good in the industry: 82.81% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.63 | ||
| Quick Ratio | 0.7 |
3. Growth
3.1 Past
The earnings per share for TXT have decreased by -2.14% 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.
Looking at the last year, TXT shows a small growth in Revenue. The Revenue has grown by 0.14% in the last year.
Measured over the past years, TXT shows a small growth in Revenue. The Revenue has been growing by 0.11% on average per year.
EPS 1Y (TTM)-2.14%
EPS 3Y18.42%
EPS 5Y7.88%
EPS Q2Q%-16.25%
Revenue 1Y (TTM)0.14%
Revenue growth 3Y3.43%
Revenue growth 5Y0.11%
Sales Q2Q%-7.17%
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 10.21% on average per year.
Based on estimates for the next years, TXT will show a small growth in Revenue. The Revenue will grow by 3.65% on average per year.
EPS Next Y11.79%
EPS Next 2Y12.87%
EPS Next 3Y12.24%
EPS Next 5Y10.21%
Revenue Next Year5.57%
Revenue Next 2Y5.09%
Revenue Next 3Y4.36%
Revenue Next 5Y3.65%
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.
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.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 12.05 indicates a correct valuation of TXT.
Compared to the rest of the industry, the Price/Earnings ratio of TXT indicates a rather cheap valuation: TXT is cheaper than 96.88% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 28.29, TXT is valued rather cheaply.
TXT is valuated reasonably with a Price/Forward Earnings ratio of 10.78.
Compared to the rest of the industry, the Price/Forward Earnings ratio of TXT indicates a rather cheap valuation: TXT is cheaper than 96.88% of the companies listed in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.08, TXT is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.05 | ||
| Fwd PE | 10.78 |
4.2 Price Multiples
TXT's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. TXT is cheaper than 89.06% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of TXT indicates a rather cheap valuation: TXT is cheaper than 93.75% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 18.45 | ||
| EV/EBITDA | 11.13 |
4.3 Compensation for Growth
TXT's 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 12.24% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.02
PEG (5Y)1.53
EPS Next 2Y12.87%
EPS Next 3Y12.24%
5. Dividend
5.1 Amount
TXT has a yearly dividend return of 0.12%, which is pretty low.
TXT's Dividend Yield is a higher than the industry average which is at 1.42.
Compared to an average S&P500 Dividend Yield of 2.57, TXT's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.12% |
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.
The dividend of TXT decreased recently.
Dividend Growth(5Y)-4.65%
Div Incr Years0
Div Non Decr Years1
5.3 Sustainability
1.46% of the earnings are spent on dividend by TXT. This is a low number and sustainable payout ratio.
DP1.46%
EPS Next 2Y12.87%
EPS Next 3Y12.24%
66.04
+1.06 (+1.63%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryAerospace & Defense
Earnings (Last)
Earnings (Next)
Inst Owners87.03%
Inst Owner Change-0.01%
Ins Owners0.58%
Ins Owner Change3.78%
Market Cap11.99B
Analysts73.33
Price Target92.16 (39.55%)
Short Float %2.14%
Short Ratio2.79
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.12% |
Yearly Dividend0.06
Dividend Growth(5Y)-4.65%
DP1.46%
Div Incr Years0
Div Non Decr Years1
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-3.59%
Min EPS beat(2)-7.04%
Max EPS beat(2)-0.14%
EPS beat(4)1
Avg EPS beat(4)-1.83%
Min EPS beat(4)-7.04%
Max EPS beat(4)2.98%
EPS beat(8)5
Avg EPS beat(8)4.17%
EPS beat(12)8
Avg EPS beat(12)6.29%
EPS beat(16)11
Avg EPS beat(16)9.52%
Revenue beat(2)0
Avg Revenue beat(2)-4.65%
Min Revenue beat(2)-6.11%
Max Revenue beat(2)-3.19%
Revenue beat(4)0
Avg Revenue beat(4)-4.24%
Min Revenue beat(4)-6.11%
Max Revenue beat(4)-1.86%
Revenue beat(8)0
Avg Revenue beat(8)-3.58%
Revenue beat(12)1
Avg Revenue beat(12)-3.12%
Revenue beat(16)3
Avg Revenue beat(16)-2.29%
PT rev (1m)0%
PT rev (3m)-7.25%
EPS NQ rev (1m)1.07%
EPS NQ rev (3m)-17.32%
EPS NY rev (1m)0%
EPS NY rev (3m)-9.62%
Revenue NQ rev (1m)0.15%
Revenue NQ rev (3m)-3.69%
Revenue NY rev (1m)-0.04%
Revenue NY rev (3m)-1.05%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.05 | ||
| Fwd PE | 10.78 | ||
| P/S | 0.88 | ||
| P/FCF | 18.45 | ||
| P/OCF | 11.83 | ||
| P/B | 1.66 | ||
| P/tB | 2.63 | ||
| EV/EBITDA | 11.13 |
EPS(TTM)5.48
EY8.3%
EPS(NY)6.13
Fwd EY9.28%
FCF(TTM)3.58
FCFY5.42%
OCF(TTM)5.58
OCFY8.45%
SpS75.44
BVpS39.67
TBVpS25.07
PEG (NY)1.02
PEG (5Y)1.53
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.89% | ||
| ROE | 11.44% | ||
| ROCE | 7.18% | ||
| ROIC | 6.18% | ||
| ROICexc | 6.96% | ||
| ROICexgc | 9.15% | ||
| OM | 6.52% | ||
| PM (TTM) | 6.01% | ||
| GM | 18.54% | ||
| FCFM | 4.74% |
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-Score7
Asset Turnover0.81
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.45 | ||
| Debt/FCF | 5.52 | ||
| Debt/EBITDA | 2.53 | ||
| Cap/Depr | 95.29% | ||
| Cap/Sales | 2.66% | ||
| Interest Coverage | 6.29 | ||
| Cash Conversion | 79.53% | ||
| Profit Quality | 78.88% | ||
| Current Ratio | 1.63 | ||
| Quick Ratio | 0.7 | ||
| Altman-Z | 2.4 |
F-Score7
WACC9.28%
ROIC/WACC0.67
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)-2.14%
EPS 3Y18.42%
EPS 5Y7.88%
EPS Q2Q%-16.25%
EPS Next Y11.79%
EPS Next 2Y12.87%
EPS Next 3Y12.24%
EPS Next 5Y10.21%
Revenue 1Y (TTM)0.14%
Revenue growth 3Y3.43%
Revenue growth 5Y0.11%
Sales Q2Q%-7.17%
Revenue Next Year5.57%
Revenue Next 2Y5.09%
Revenue Next 3Y4.36%
Revenue Next 5Y3.65%
EBIT growth 1Y-14.71%
EBIT growth 3Y1.11%
EBIT growth 5Y-3.59%
EBIT Next Year45.48%
EBIT Next 3Y19.54%
EBIT Next 5Y11.67%
FCF growth 1Y-24.77%
FCF growth 3Y-19%
FCF growth 5Y-0.75%
OCF growth 1Y-19.91%
OCF growth 3Y-14.07%
OCF growth 5Y0%