Reasons to Add Textron (TXT) Stock to Your Portfolio Now
Textron Inc. TXT, with a strong backlog and rising earnings estimates, offers a great investment opportunity in the Aerospace Defense sector.
Let’s focus on the reasons that make this Zacks Rank #2 (Buy) stock a promising investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for TXT’s 2024 earnings per share (EPS) has increased 8.66% to $6.27 per share in the past 60 days. The Zacks Consensus Estimate for Textron’s total revenues for 2024 stands at $14.64 billion, which indicates year-over-year growth of 6.99%.
The company’s (three to five years) earnings growth is pegged at 10.12%. It delivered an average earnings surprise of 13.53% in the last four quarters.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing its funds to generate higher returns. Currently, TXT’s ROE is 16.05% compared with its industry’s average of 10.51%. This indicates that the company has been utilizing its funds more constructively than its peers in the industry.
Rising Backlog and Capital Expenditure
Textron’s solid order activities resulted in a backlog of $14 billion at the end of the fourth quarter of 2023. The company’s Aviation segment has a backlog of $7.2 billion, which witnessed an improvement of $782 million from the year-ago quarter’s level. This increase is due to the solid demand for launching new products, which are dominating the aviation market across the globe.
The company now expects its capital expenditure plan worth $425 million for 2024, up 5.7% from the previous level of $402 in 2023.
Solvency and Liquidity Ratio
Textron’s times interest earned ratio (TIE) at the end of the fourth quarter of 2023 was 15.1. The strong TIE ratio indicates that the company will be able to meet its interest payment obligations in the near term without any problems.
The current ratio at the end of the fourth quarter of 2023 was 1.92. The ratio being greater than one indicates the company’s ability to meet its future short-term liabilities without difficulties.
Price Performance
In the past three months, TXT shares have risen 16.4% compared to its industry’s average decline of 6.7%.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same sector are Leidos LDOS, Spire SPIR and Safran SAFRY, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Leidos’ long-term (three to five years) earnings growth rate is pegged at 8.12%. The Zacks Consensus Estimate for the company’s 2024 EPS is pegged at $7.75, which implies a year-over-year increase of 6.16%.
Spire delivered an average earnings surprise of 28.01% in the last four quarters. The Zacks Consensus Estimate for the company’s 2024 EPS stands at a loss of 9 cents, which calls for a year-over-year increase of 95.93%.
Safran’s long-term earnings growth rate is pegged at 30.22%. The Zacks Consensus Estimate for the company’s 2024 EPS is pegged at $1.88, which indicates a year-over-year rise of 48.03%.
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Textron Inc. (TXT) : Free Stock Analysis Report
Safran SA (SAFRY) : Free Stock Analysis Report
Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report
Spire Global, Inc. (SPIR) : Free Stock Analysis Report
