Textron Gets Army Contract

Textron Marine & Land Systems, an operating unit of Textron Systems, a Textron Inc. (TXT - Analyst Report) company, has received a $64.3 million firm-fixed-price contract award from the U.S. Army Tank-automotive and Armaments Command (TACOM). Per the contract the company will deliver 37 M1117 Armored Security Vehicles (ASV) and 51 M1200 Armored Knight vehicles. Work on the contract will be performed at Textron’s facility in New Orleans and is expected to finish by the end of fiscal 2012.

Textron Systems focuses on innovative solutions to the defense, homeland security and aerospace communities. Textron Marine & Land Systems specializes in the design, production and support of advanced marine craft, armored combat vehicles, turrets and related subsystems. It serves military and commercial customers domestically and internationally.

Textron is a global multi-industry company that manufactures aircraft, automotive engine components and industrial tools. It is also a provider of solutions and services for aircraft, fastening systems and industrial products and components.

Textron is slated to release its earnings for the first quarter of fiscal 2011 on April 20, 2011. The Zacks Consensus Estimate for the first quarter is 17 cents. The Zacks Consensus Estimate for fiscal 2011 is $1.18, up 45.49%. Textron had a consistent track record with regard to surpassing earnings estimates in the last four quarters with a trailing four-quarter average of 108.63%.

Textron’s diversified presence across commercial, manufacturing and industrial products as well as finance operations protects it from specific business risk. The company is increasingly focused on its core manufacturing business and is gradually exiting from its commercial finance business through orderly liquidation and selected sales.

Textron’s future success in the competitive defense industry depends upon its ability to develop and market its defense-related products and services to the U.S. Government, as well as its ability to provide people, technologies, facilities, equipment and financial capacity needed to deliver those products and services at maximum efficiency.

However, Textron remains exposed to defense spending cuts. Moreover, a slower recovery in the business jet market could lead to deferrals of orders. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock. In the near term, we would advise investors to accumulate its short-term Zacks #1 Rank (Strong Buy rating) peers like Lydall Inc. (LDL) and Hutchison Whampoa Ltd. (HUWHY).

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