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Manufacturing is stronger than people think. Textron Inc. (TXT - Analyst Report) is expecting double digit sales growth in 2012 on the back of strong manufacturing in several key subsidiaries. This Zacks #1 Rank (Strong Buy) is a value stock with a P/S ratio of just 0.7.

Textron is a true conglomerate which operates several diversified businesses in the aerospace, defense, industrial and financial sectors in 25 countries.

Founded in 1923, it is best known for its Bell Helicopters and Cessna Aircraft subsidiaries.

Big Beat To Close Out 2011

On Jan 25, Textron reported its fourth quarter results and surprised on the Zacks Consensus by 44%. Earnings per share were 49 cents compared to the consensus of just 34 cents.

Revenue jumped 4.1% to $3.3 billion as manufacturing revenue climbed 4.6%.

The Cessna segment saw revenue rise $51 million as it delivered 67 new Citation jets and saw higher volumes of used jets, single engine aircraft and Caravans.

Bell also saw revenue increase $35 million in the fourth quarter compared to the year ago period. The Bell backlog rose $981 million to $7.3 billion from the end of the third quarter of 2011.

2012 Is Looking Higher

In January, Textron was bullish about 2012 with revenue growth of about 11% to $12.5 billion. It saw double digit revenue growth at its two flagship brands of Cessna and Bell.

Textron expects Bell's commercial business to be particularly strong in 2012.

However, Textron Systems is expected to post flat revenue and the Industrial segment just modest growth.

Earnings were expected in the range of $1.80 to $2.00 per share.

2012 Zacks Consensus Estimate Rises

Since the earnings report, the analysts have raised estimates in line with the company's guidance.

The 2012 Zacks Consensus Estimate rose to $1.91 from $1.69 in the last 90 days.

That is earnings growth of 46%.

Textron Is a Value Stock

Textron recently traded at 2-year highs, but it still has value credentials.

In addition to a P/S ratio under 1.0, which can mean a company is undervalued, it also has a forward P/E of 14.5.

I admit that Textron isn't the cheapest stock out there. A P/E of 14.5 puts it right on the edge of what I consider to be "value" which is a P/E under 15.

However, it also has a price-to-book of 2.8, which is under the 3.0 level I use as a cut off for value.

The company also has a solid 1-year return on equity (ROE) of 12.9%.

Textron is scheduled to report first quarter results on Apr 18. We'll see if the company's optimism is still intact after what should have been an interesting first quarter.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at @TraceyRyniec.

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