Is Textron (TXT) Stock Undervalued Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is Textron (TXT). TXT is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 14.59, while its industry has an average P/E of 23.25. Over the past year, TXT's Forward P/E has been as high as 18.19 and as low as 13.22, with a median of 15.51.
Investors will also notice that TXT has a PEG ratio of 1.30. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. TXT's industry currently sports an average PEG of 2.07. TXT's PEG has been as high as 1.55 and as low as 0.98, with a median of 1.17, all within the past year.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. TXT has a P/S ratio of 1.16. This compares to its industry's average P/S of 1.67.
These are only a few of the key metrics included in Textron's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, TXT looks like an impressive value stock at the moment.
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Textron Inc. (TXT) : Free Stock Analysis Report
