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Textron (TXT - Free Report) , a Zacks Rank #1 (Strong Buy), is a global manufacturer of aircraft, automotive engine components, and industrial tools. The company continues to enjoy strong order flows for its commercial and defense products. The stock recently broke out to an all-time high and has been benefitting from a resurgence in the industrial sector. Textron shares are displaying relative strength as buying pressure accumulates in this market leader.
The company is part of the Zacks Aerospace – Defense industry group, which currently ranks in the top 34% out of more than 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months. This industry is also showing several favorable characteristics:
Image Source: Zacks Investment Research
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Company Description
Textron operates in the aircraft, defense, and industrial businesses worldwide. The company manufactures and sells business jets, defense aircraft, and military and commercial helicopters. It also provides maintenance, inspection, and repair services, as well as sells commercial parts.
In addition, Textron offers advanced marine crafts, electronic systems and solutions, live military training, and armored and specialty vehicles. The multi-industry company was founded in 1923, employs 35,000 people and is headquartered in Providence, Rhode Island.
Solid order activities resulted in a $14 billion backlog to start this year, which strengthens the company’s revenue-generating capacity. A solid product pipeline along with high levels of innovation are expected to boost future operating results significantly.
Earnings Trends and Future Estimates
Textron has established an impressive earnings history, surpassing earnings estimates in each of the last four quarters. Back in January, the company reported fourth-quarter earnings of $1.60/share, which marked a 4.58% surprise over the $1.53/share consensus estimate. Earnings improved 49.5% year-over-year.
The industrial manufacturer has delivered a trailing four-quarter average earnings surprise of 13.5%. Consistently beating earnings estimates is a recipe for success.
Analysts covering TXT are in agreement and have been raising their earnings estimates across the board. For the current quarter, analysts bumped up earnings estimates by 7.32% in the past 60 days. The Q1 Zacks Consensus EPS Estimate now stands at $1.32/share, reflecting potential growth of 25.7% relative to the year-ago quarter. Revenues are projected to climb 11.6% to $3.37 billion.
Image Source: Zacks Investment Research
Let’s Get Technical
TXT shares have started off 2024 on a strong note, advancing more than 12% year-to-date. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Image Source: StockCharts
Notice how both the 50-day (blue line) and 200-day (red line) moving averages are sloping up. The stock has been making a series of 52-week highs and recently surpassed its former all-time high. With both strong fundamental and technical indicators, TXT is poised to continue its outperformance.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Textron has recently witnessed positive revisions. As long as this trend remains intact (and TXT continues to deliver earnings beats), the stock will likely continue its bullish run this year.
Despite the impressive performance, TXT stock remains relatively undervalued:
Image Source: Zacks Investment Research
Bottom Line
As industrials rebound amid a broad market rally, the future looks bright for this highly-ranked, leading stock. Textron is ranked favorably by our Zacks Style Scores, with a second-best ‘B’ rating in each of our Growth and Value categories. This means that the stock is likely to move higher based on a promising combination of strong earnings and sales growth along with favorable valuation metrics.
Backed by a leading industry group and impressive history of earnings beats, it’s not difficult to see why TXT stock is a compelling investment. An appealing technical trend along with robust fundamentals paint a bullish picture for Textron.
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Bull of the Day: Textron (TXT)
Textron (TXT - Free Report) , a Zacks Rank #1 (Strong Buy), is a global manufacturer of aircraft, automotive engine components, and industrial tools. The company continues to enjoy strong order flows for its commercial and defense products. The stock recently broke out to an all-time high and has been benefitting from a resurgence in the industrial sector. Textron shares are displaying relative strength as buying pressure accumulates in this market leader.
The company is part of the Zacks Aerospace – Defense industry group, which currently ranks in the top 34% out of more than 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months. This industry is also showing several favorable characteristics:
Image Source: Zacks Investment Research
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Company Description
Textron operates in the aircraft, defense, and industrial businesses worldwide. The company manufactures and sells business jets, defense aircraft, and military and commercial helicopters. It also provides maintenance, inspection, and repair services, as well as sells commercial parts.
In addition, Textron offers advanced marine crafts, electronic systems and solutions, live military training, and armored and specialty vehicles. The multi-industry company was founded in 1923, employs 35,000 people and is headquartered in Providence, Rhode Island.
Solid order activities resulted in a $14 billion backlog to start this year, which strengthens the company’s revenue-generating capacity. A solid product pipeline along with high levels of innovation are expected to boost future operating results significantly.
Earnings Trends and Future Estimates
Textron has established an impressive earnings history, surpassing earnings estimates in each of the last four quarters. Back in January, the company reported fourth-quarter earnings of $1.60/share, which marked a 4.58% surprise over the $1.53/share consensus estimate. Earnings improved 49.5% year-over-year.
The industrial manufacturer has delivered a trailing four-quarter average earnings surprise of 13.5%. Consistently beating earnings estimates is a recipe for success.
Analysts covering TXT are in agreement and have been raising their earnings estimates across the board. For the current quarter, analysts bumped up earnings estimates by 7.32% in the past 60 days. The Q1 Zacks Consensus EPS Estimate now stands at $1.32/share, reflecting potential growth of 25.7% relative to the year-ago quarter. Revenues are projected to climb 11.6% to $3.37 billion.
Image Source: Zacks Investment Research
Let’s Get Technical
TXT shares have started off 2024 on a strong note, advancing more than 12% year-to-date. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Image Source: StockCharts
Notice how both the 50-day (blue line) and 200-day (red line) moving averages are sloping up. The stock has been making a series of 52-week highs and recently surpassed its former all-time high. With both strong fundamental and technical indicators, TXT is poised to continue its outperformance.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Textron has recently witnessed positive revisions. As long as this trend remains intact (and TXT continues to deliver earnings beats), the stock will likely continue its bullish run this year.
Despite the impressive performance, TXT stock remains relatively undervalued:
Image Source: Zacks Investment Research
Bottom Line
As industrials rebound amid a broad market rally, the future looks bright for this highly-ranked, leading stock. Textron is ranked favorably by our Zacks Style Scores, with a second-best ‘B’ rating in each of our Growth and Value categories. This means that the stock is likely to move higher based on a promising combination of strong earnings and sales growth along with favorable valuation metrics.
Backed by a leading industry group and impressive history of earnings beats, it’s not difficult to see why TXT stock is a compelling investment. An appealing technical trend along with robust fundamentals paint a bullish picture for Textron.