Textron (TXT) Down 0.9% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Textron (TXT). Shares have lost about 0.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Textron due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Textron Q4 Earnings Beat Estimates, Revenues Rise Y/Y
Textron reported fourth-quarter 2023 adjusted earnings of $1.60 per share, which surpassed the Zacks Consensus Estimate of $1.53 by 4.6%. The bottom line also improved 30.1% from the year-ago quarter’s recorded figure.
The company reported GAAP earnings of $1.01 per share, down from $1.07 registered in the fourth quarter of 2022.
The company generated 2023 adjusted earnings of $5.59 per share, which surpassed the Zacks Consensus Estimate of $5.54 by 0.9%. The bottom line also improved 25.6% from the year-ago figure.
Revenues
TXT reported total revenues of $3,892 million, which missed the Zacks Consensus Estimate of $3,917.6 million by 0.7%. However, the reported figure increased 7% from the year-ago quarter’s level of $3,636 million.
Manufacturing revenues improved 7% year over year to $3,880 million. Revenues in the Finance division surged 9.1% to $12 million.
The company generated2023 revenues of $13.68 billion, which missed the Zacks Consensus Estimate of $13.69 by a tad. The revenues, however, improved 6.3% from the year-ago figure.
Segmental Performance
Textron Aviation: Revenues from this segment declined 3.7% year over year to $1,524 million. The decrease was primarily on account of lower volume and mix.
The segment generated an operating profit of $193 million in the quarter under review compared with $170 million in the year-ago period. This improvement can be attributed to favorable pricing, net of inflation.
Textron Aviation delivered 50 jets compared with 52 in the year-ago quarter. It also delivered 44 commercial turboprops, down from 47 in the fourth quarter of 2022.
The segment’s order backlog at the end of the quarter totaled $7.2 billion.
Bell: Revenues from this segment amounted to $1,071 million, up 31.3% from the year-ago quarter’s reported number. This was driven by higher commercial revenues backed by increased deliveries and higher military revenues related to the FLRAA program.
The segment’s profit improved a solid 87.3% to $118 million, driven by higher volume and mix.
Bell delivered 91 commercial helicopters in the quarter, up from 71 last year. Its order backlog at the end of the quarter totaled $4.8 billion, down sequentially from $5.2 billion.
Textron Systems: This segment’s revenues came in flat year over year at $314 million.
Segmental profits also came in flat at $35 million.
Textron Systems’ backlog at the end of the fourth quarter totaled $2 billion.
Industrial: Revenues from this segment improved 6% to $961 million, driven by higher volume and mix at Kautex and a favorable impact from pricing at Textron Specialized Vehicles.
Moreover, the segment’s profit totaled $57 million compared with $43 million in the prior-year quarter. The improvement can be attributed to a higher pricing, net of inflation.
Textron eAviation: Revenues from the segment totaled $10 million, up 66.7% year over year. Meanwhile, it reported a loss of $23 million in the fourth quarter, wider than a reported loss of $10 million in the prior-year period.
Finance: This segment’s revenues improved 9.1% to $12 million. Its profit totaled $4 million in the fourth quarter compared with $5 million in the year-ago period.
Financials
As of Dec 31, 2023, cash and cash equivalents totaled $2,121 million compared with $1,963 million as of Dec 31, 2022.
Cash flow from operating activities amounted to $1,270 million as of Dec 31, 2023, compared with $1,461 million in the year-ago period.
Capital expenditures amounted to $178 million in the fourth quarter of 2023 compared with $162 million in the prior-year period.
The long-term debt totaled $3,169 million as of Dec 31, 2023, compared with $3,175 million as of Dec 31, 2022.
Guidance
Textron has provided its guidance for 2024. The company expects to generate adjusted earnings per share in the range of $6.20-$6.40. The Zacks Consensus Estimate for TXT’s 2024 earnings is pegged at $5.80 per share, which lies below the company’s guided range.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 6.86% due to these changes.
VGM Scores
Currently, Textron has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Textron has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Textron Inc. (TXT) : Free Stock Analysis Report
