Textron Inc. (TXT) is set to report its second quarter 2013 results on Jul 17 before the market opens. Last quarter, the company posted a 14.89% negative surprise. Let’s see how things are shaping up for this announcement.
Factors to Consider This Quarter
Textron is known around the world for its most recognizable and valuable brand names, such as, Bell Helicopter, Cessna Aircraft Company, Jacobsen, Kautex, Lycoming, E-Z-GO and Greenlee. Textron’s geographically diverse network of aircraft, defense & intelligence, industrial and finance businesses negates any specific business risk. Going forward, we believe Textron should do well in its commercial aerospace businesses with the gradual recovery in the economy.
However, the company, like its peers, continues to face defense budget deficits and political uncertainty. Though the company received a number of contracts this quarter, those were not sizeable. Budget cuts from sequestration have reduced the number of contracts awarded by the Department of Defense.
Our proven model does not conclusively show that Textron is likely to beat earnings this quarter. That is because a stock needs to have both a positive Zacks Earnings ESP (Expected Surprise Prediction) (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here, as you will see below.
Zacks ESP: The Zacks ESP is 0.0%.
Zacks Rank #3 (Hold): Textron Inc. carries a Zacks Rank #3 (Hold). However, the Zacks #3 Rank when combined with a 0.0% ESP makes surprise prediction difficult. We caution against stocks with Zacks #4 and #5 Ranks (Sell-rated stocks) going into the earnings announcement.
Other Stocks to Consider
Here are some other companies you may want to consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:
Raytheon Company (RTN), with Earnings ESP of +1.54% and a Zacks Rank #3 (Hold).
General Dynamics Corp. (GD), with Earnings ESP of +2.45% and a Zacks Rank #3 (Hold).
Rockwell Collins Inc. (COL), with Earnings ESP of +0.87% and a Zacks Rank #3 (Hold).
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