OK ... time for some top-down projections based on the P&L on p. 18 of the 2012 10-K ... but first, post-mortems on the forecast I did a year ago for 2012 ... topline est of $12.4B v. $12.2 due primarily to Cessna miss ... segment profit was on at $1.1 but net missed at $650MM est v. 581 resulting from higher corp exp ... resultant eps of $2.12 forecast came in at $1.97 ...
For a "baseline" 2013, I have rev at $13.2B, up 8% (same as 2012 incr) ... net at $685MM or a 5% margin, again same as 2012, eps at $2.32 diluted ... a "safe/sandbagged" forecast (TXT upside is $2.30) ...
However, with only a slight stretch, push rev to $13.6, +11%, and get net margin up to what used to be a "going" level, 6.5% (average 2007-08) for $884MM ... and, voila, eps is $3 ...
Great you put out the 2013 projections, i was about to request. LuPune, couple of key factors will improve the revenue and margin increase compared to 2012.
1) cost of capital or borrowing cost has been substantially lower lately
2) second largest cost after materials, i.e., labor cost is down substantially because Textron initiatiatives to force early retirements and hire younger, cheaper workers instead.
3) point number 2 above also resulting in reduced growth in pension liability accruals
4) Systems has been getting a lot of small new contracts and Bell sold 30 medical evacuation helicopters that were not expected. North Korea noise will make lawmakers think twice about sequester and an actual tension may instead demand wartime readiness for increased procurement including high-margin spares
5) cessna holds the biggest surprise to the upside as aviation business recovers further.
All this means closer to $3 earnings ($45 price at 15 multiple) even though Textron , like you said, will sandbag to be able to surprise upwards. Add the retirement of non-captive finance liabilities and dividend increase announcement and we may comfortably go above $45 in 2013.