Textron Inc. (TXT - Analyst Report) was awarded a $113.4 million firm-fixed-price contract. The award will provide for the procurement of Mobile Strike Force vehicles to support the Afghanistan National Security Forces. This contract is in support of Foreign Military Sales for Afghanistan. Work will be performed in New Orleans, with an estimated completion date of Feb 28, 2014. The U.S. Army Contracting Command, Warren, Michigan, is the contracting activity.
We believe Textron should do well in its commercial aerospace businesses with the gradual recovery in the economy. The improving fundamentals in the commercial aerospace industry should bode well for Textron’s Cessna jets and Bell Helicopter businesses going forward. Cessna’s fortunes will improve mainly through high demand for light cabin business jets. Also, in the near term, Bell’s growth will be guided by a judicious mix of military and commercial business from the V-22 Osprey and H-1 helicopters. Textron Systems will also see growth coming from government’s focus on UAVs (unmanned aerial vehicles) and ASVs (armored security vehicles).
Also, Textron’s geographically diverse network of aircraft, defense & intelligence, industrial and finance businesses negates any specific business risk. The company is known around the world for its most recognizable and valuable brand names, such as Bell Helicopter, Cessna Aircraft Company, Jacobsen, Kautex, Lycoming, E-Z-GO and Greenlee. The company has a strong presence in diverse areas of business jets and other general aviation aircraft, helicopter, aircraft engines, golf carts, turf maintenance equipment, electronic test equipment and blow-molded fuel tanks. Textron continues to enjoy a strong backlog at its business divisions.
Textron’s balance sheet remains stable with a long-term debt-to-capitalization of 50.9% at the end of Dec 2012 versus the Zacks Industry Average of 64.9%. The company also ended the full year 2012 with cash holdings of $1.4 billion, which, along with its receivables liquidation expected to come through, would be enough to keep the liquidity profile of the company in good shape. Textron’s balance sheet also improved, shedding $547 million of long-term debt in the twelve-month period with outstanding debt at approximately $1.8 billion.
Based in Providence, Rhode Island, Textron Inc. is a global multi-industry company that manufactures aircraft, automotive engine components and industrial tools. The stock currently has a Zacks Rank #3 (Hold). The company’s competitors worth considering at this moment are China Merchants Holdings Company Limited (CMHHY - Snapshot Report), Jardine Strategic Holdings Ltd. , and Koninklijke KPN N.V. (KKPNF - Snapshot Report); all of them carry a Zacks Rank #1 (Strong Buy).