TXT gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 73 industry peers in the Aerospace & Defense industry. TXT has an average financial health and profitability rating. TXT has a correct valuation and a medium growth rate.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year TXT was profitable.
TXT had a positive operating cash flow in the past year.
Each year in the past 5 years TXT has been profitable.
In the past 5 years TXT always reported a positive cash flow from operatings.

1.2 Ratios

Looking at the Return On Assets, with a value of 4.76%, TXT is in the better half of the industry, outperforming 68.49% of the companies in the same industry.
TXT has a better Return On Equity (11.04%) than 71.23% of its industry peers.
TXT has a Return On Invested Capital (6.29%) which is in line with its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for TXT is below the industry average of 8.56%.

		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

With a decent Profit Margin value of 5.81%, TXT is doing good in the industry, outperforming 61.64% of the companies in the same industry.
TXT's Profit Margin has been stable in the last couple of years.
With a Operating Margin value of 6.57%, TXT perfoms like the industry average, outperforming 49.32% of the companies in the same industry.
TXT's Operating Margin has declined in the last couple of years.
Looking at the Gross Margin, with a value of 20.62%, TXT is in line with its industry, outperforming 41.10% of the companies in the same industry.
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

The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so TXT 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.
The debt/assets ratio for TXT has been reduced compared to a year ago.

2.2 Solvency

An Altman-Z score of 2.74 indicates that TXT is not a great score, but indicates only limited risk for bankruptcy at the moment.
The Altman-Z score of TXT (2.74) is worse than 64.38% of its industry peers.
The Debt to FCF ratio of TXT is 5.37, which is a neutral value as it means it would take TXT, 5.37 years of fcf income to pay off all of its debts.
TXT has a Debt to FCF ratio of 5.37. This is in the better half of the industry: TXT outperforms 68.49% of its industry peers.
TXT has a Debt/Equity ratio of 0.45. This is a healthy value indicating a solid balance between debt and equity.
Looking at the Debt to Equity ratio, with a value of 0.45, TXT is in line with its industry, outperforming 52.05% of the companies in the same industry.

		Industry Rank	Sector Rank
Debt/Equity	0.45
Debt/FCF	5.37
Altman-Z	2.74

ROIC/WACC0.66

WACC9.51%

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.
TXT's Current ratio of 1.71 is on the low side compared to the rest of the industry. TXT is outperformed by 65.75% of its industry peers.
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 for TXT have decreased by -0.35% 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.
The Revenue has been growing slightly by 1.83% in the past 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)-0.35%

EPS 3Y18.42%

EPS 5Y7.88%

EPS Q2Q%10.71%

Revenue 1Y (TTM)1.83%

Revenue growth 3Y3.43%

Revenue growth 5Y0.11%

Sales Q2Q%5.11%

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 11.64% on average per year.
The Revenue is expected to grow by 3.72% on average over the next years.

EPS Next Y12.28%

EPS Next 2Y12.09%

EPS Next 3Y11.9%

EPS Next 5Y11.64%

Revenue Next Year5.81%

Revenue Next 2Y5.54%

Revenue Next 3Y4.99%

Revenue Next 5Y3.72%

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.

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4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 16.61, the valuation of TXT can be described as correct.
TXT's Price/Earnings ratio is rather cheap when compared to the industry. TXT is cheaper than 98.63% of the companies in the same industry.
TXT is valuated rather cheaply when we compare the Price/Earnings ratio to 27.21, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 13.80, which indicates a correct valuation of TXT.
Based on the Price/Forward Earnings ratio, TXT is valued cheaper than 98.63% of the companies in the same industry.
TXT's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 25.98.

		Industry Rank	Sector Rank
PE	16.61
Fwd PE	13.8

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, TXT is valued 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 95.89% of the companies in the same industry.

		Industry Rank	Sector Rank
P/FCF	24.09
EV/EBITDA	14.28

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)1.35

PEG (5Y)2.11

EPS Next 2Y12.09%

EPS Next 3Y11.9%

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5. Dividend

5.1 Amount

TXT has a yearly dividend return of 0.08%, which is pretty low.
Compared to an average industry Dividend Yield of 0.34, TXT pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 1.81, TXT's dividend is way lower than the S&P500 average.

		Industry Rank	Sector Rank
Dividend Yield	0.08%

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 2Y12.09%

EPS Next 3Y11.9%

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TEXTRON INC / TXT FAQ

Can you provide the ChartMill fundamental rating for TEXTRON INC?

ChartMill assigns a fundamental rating of 5 / 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 16.61 and the Price/Book (PB) ratio is 2.23.

Can you provide the financial health for TXT stock?

The financial health rating of TEXTRON INC (TXT) is 4 / 10.