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Should Value Investors Buy Textron (TXT) Stock?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company value investors might notice is Textron (TXT - Free Report) . TXT is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 13.35. This compares to its industry's average Forward P/E of 23.68. Over the last 12 months, TXT's Forward P/E has been as high as 17.68 and as low as 13.10, with a median of 15.15.

TXT is also sporting a PEG ratio of 1.19. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. TXT's industry currently sports an average PEG of 1.65. Over the last 12 months, TXT's PEG has been as high as 1.47 and as low as 0.98, with a median of 1.17.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. TXT has a P/S ratio of 1.07. This compares to its industry's average P/S of 1.59.

Finally, investors will want to recognize that TXT has a P/CF ratio of 11.33. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. TXT's P/CF compares to its industry's average P/CF of 43.77. Within the past 12 months, TXT's P/CF has been as high as 13.66 and as low as 10.05, with a median of 11.87.

These are just a handful of the figures considered in Textron's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that TXT is an impressive value stock right now.


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