Textron Inc. (NYSE:TXT) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of TXT, it is a financially-sound company with a great track record of performance, trading at a discount. Below is a brief commentary on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, read the full report on Textron here.
Solid track record and good value
Over the past few years, TXT has more than doubled its earnings, with its most recent figure exceeding its annual average over the past five years. This illustrates a strong track record, leading to a satisfying return on equity of 23%, which is an optimistic signal for the future. TXT is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This implies that TXT manages its cash and cost levels well, which is an important determinant of the company’s health. TXT’s earnings amply cover its interest expense. Paying interest on time and in full can help the company get favourable debt terms in the future, leading to lower cost of debt and helps TXT expand.
TXT is currently trading below its true value, which means the market is undervaluing the company's expected cash flow going forward. Investors have the opportunity to buy into the stock to reap capital gains, if TXT's projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Compared to the rest of the aerospace & defense industry, TXT is also trading below its peers, relative to earnings generated. This bolsters the proposition that TXT's price is currently discounted.
For Textron, there are three essential factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for TXT’s future growth? Take a look at our free research report of analyst consensus for TXT’s outlook.
- Dividend Income vs Capital Gains: Does TXT return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from TXT as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of TXT? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.