TXT gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 73 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 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.
Of the past 5 years TXT 4 years were profitable.
TXT had a positive operating cash flow in 4 of the past 5 years.

1.2 Ratios

TXT has a Return On Assets of 4.76%. This is in the better half of the industry: TXT outperforms 68.49% of its industry peers.
Looking at the Return On Equity, with a value of 11.04%, TXT is in the better half of 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 8.65%.

		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 60.27% of its industry peers.
In the last couple of years the Profit Margin of TXT has remained more or less at the same level.
Looking at the Operating Margin, with a value of 6.57%, TXT is in line with its industry, outperforming 49.32% of the companies in the same industry.
In the last couple of years the Operating Margin of TXT has declined.
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

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

TXT has an Altman-Z score of 2.67. This is not the best score and indicates that TXT is in the grey zone with still 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 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 better Debt to FCF ratio (5.37) 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 in line with its industry peers.

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

ROIC/WACC0.64

WACC9.77%

2.3 Liquidity

A Current Ratio of 1.71 indicates that TXT should not have too much problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.71, TXT is doing worse than 65.75% of the companies in the same industry.
TXT has a Quick Ratio of 1.71. 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 0.73, TXT is not doing good in the industry: 83.56% of the companies in the same industry are doing better.

		Industry Rank	Sector Rank
Current Ratio	1.71
Quick Ratio	0.73

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

TXT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 11.50%, which is quite good.
The Earnings Per Share has been growing by 24.17% on average over the past years. This is a very strong growth

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

TXT is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 11.68% yearly.
The Revenue is expected to grow by 3.21% on average over the next years.

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

The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.

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4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 14.41, 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/Earnings ratio.
When comparing the Price/Earnings ratio of TXT to the average of the S&P500 Index (28.32), we can say TXT is valued slightly cheaper.
Based on the Price/Forward Earnings ratio of 12.79, the valuation of TXT can be described as correct.
TXT's Price/Forward Earnings ratio is rather cheap when compared to the industry. TXT is cheaper than 98.63% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 25.57, TXT is valued a bit cheaper.

		Industry Rank	Sector Rank
PE	14.41
Fwd PE	12.79

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.
95.89% 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	22.33
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.
TXT's Dividend Yield is a higher than the industry average which is at 0.34.
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 been paying a dividend for at least 10 years, so it has a reliable track record.
TXT has decreased its dividend 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.