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Category: Textron (TXT)
Date: 1 February 2021 Stock price of Textron (TXT): $44.61 We take a look at the 4th quarter 2020 earnings report of Textron (TXT) a multi-industry company that leverages its global network of aircraft, defense, industrial and finance businesses to provide customers with innovative solutions and services. For the quarter the group reported revenues of $3.67 billion and net income of $236 million.
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Mr. Robert G. Goldstein, Chairman and Chief Executive Officer - His impact will live on through the company's 50,000 team members and the iconic properties he developed around the world. These last few weeks since Sheldon's passing have been difficult for all of us, but his commitment to investing aggressively to build iconic resorts that deliver economic benefits to our host communities, the core of the company's operating strategy, remains firmly in place "
More About Textron (TXT)
Textron Inc. is a multi-industry company that leverages its global network of aircraft, defense, industrial and finance businesses to provide customers with innovative solutions and services. Textron is known around the world for its powerful brands such as Bell, Cessna, Beechcraft, Hawker, Jacobsen, Kautex, Lycoming, E-Z-GO, Arctic Cat, Textron Systems, and TRU Simulation + Training.
Overview of Textron 4th quarter 2020 earnings report
- EPS of $1.03; adjusted EPS of $1.06
- Fourth quarter manufacturing segment profit margin of 8.8%
- Full year net cash from operating activities of $833 million
Textron Aviation
Revenues at Textron Aviation of $1.6 billion were down $169 million, primarily due to lower Citation jet volume and lower aftermarket volume. Textron Aviation delivered 61 jets, down from 71 last year, and 61 commercial turboprops, up from 59 last year. Segment profit was $108 million down from $134 million a year ago, primarily due to the impact from lower volume and mix. Textron Aviation backlog at the end of the fourth quarter was $1.6 billion.
Bell
Bell revenues were $871 million down from $961 million last year, on lower military revenues and commercial volume. Bell delivered 57 commercial helicopters in the quarter, down from 76 last year. Segment profit of $110 million was down $8 million, largely on the lower volume partially offset by a favorable impact from performance, primarily reflecting higher favorable program adjustments. Bell backlog at the end of the fourth quarter was $5.3 billion.
Textron Systems
Revenues at Textron Systems were $357 million, down from $399 million last year, primarily due to lower volume in the TRU Simulation + Training business. Segment profit of $49 million was up from $33 million last year, primarily due to the favorable impact from performance.
Textron Systems’ backlog at the end of the fourth quarter was $2.6 billion.
Industrial
Industrial revenues were $866 million, a decrease of $61 million from last year, primarily related to reduced demand in the ground support equipment business within the Specialized Vehicles product line. Segment profit was $55 million, up 25% from the fourth quarter of 2019, largely due to a favorable impact from pricing and inflation, and favorable performance, partially offset by the impact of lower volume and mix.
Finance
Finance segment revenues in the quarter were $13 million, and profit was $2 million.
Textron management commentary on their 4th quarter 2020 earnings report
Providence, Rhode Island – January 27, 2021 – Textron Inc. (NYSE: TXT) today reported fourth quarter 2020 net income of $1.03 per share. Adjusted net income, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release, was $1.06 per share for the fourth quarter of 2020, compared to $1.11 per share in the fourth quarter of 2019. Adjusted net income for 2020 excludes $23 million of pre-tax special charges ($0.07 per share, after-tax) and a one-time favorable tax benefit related to the sale of TRU Canada ($0.04 per share). Full-year 2020 net income was $1.35 per share. Full-year 2020 adjusted net income, a non-GAAP measure, was $2.07 per share, down from $3.74 in 2019. “Textron closed out 2020 with a solid performance across all our manufacturing segments,” said Textron Chairman and CEO Scott C. Donnelly. “At Systems, Industrial and Bell, we saw margin improvements and at Aviation, we delivered 61 jets with continued order momentum.”
Outlook
Textron is forecasting 2021 revenues of approximately $12.5 billion, up from $11.7 billion in 2020. Textron expects full-year 2021 GAAP earnings per share from continuing operations will be in the range of $2.64 to $2.88, or $2.70 to $2.90 on an adjusted basis (non-GAAP), which is reconciled to GAAP in an attachment to this release.
The company is estimating net cash provided by operating activities of the manufacturing group will be between $950 million and $1,050 million and manufacturing cash flow before pension contributions (a non-GAAP measure) will be between $600 million and $700 million, with planned pension contributions of about $50 million. Donnelly continued, “Our outlook reflects continued improvement in our end-markets and our ongoing investments in new products and programs to drive earnings growth and margin expansion.”
Textron is forecasting 2021 revenues of approximately $12.5 billion, up from $11.7 billion in 2020. Textron expects full-year 2021 GAAP earnings per share from continuing operations will be in the range of $2.64 to $2.88, or $2.70 to $2.90 on an adjusted basis (non-GAAP), which is reconciled to GAAP in an attachment to this release.
The company is estimating net cash provided by operating activities of the manufacturing group will be between $950 million and $1,050 million and manufacturing cash flow before pension contributions (a non-GAAP measure) will be between $600 million and $700 million, with planned pension contributions of about $50 million. Donnelly continued, “Our outlook reflects continued improvement in our end-markets and our ongoing investments in new products and programs to drive earnings growth and margin expansion.”
Textron (TXT) stock price chart over the last 5 years
The image below shows the stock price history of Textron (TXT) over the last 5 years. And its been a ok time for Textron stockholders with the stock increasing by 30.8% over the last 5 years.
The stock of Textron is trading at closer to its 52 week low than it is to its 52 week high which is a clear indication that the short term sentiment and momentum of Textron stock is negative at this point in time.
The stock of Textron is trading at closer to its 52 week low than it is to its 52 week high which is a clear indication that the short term sentiment and momentum of Textron stock is negative at this point in time.
Latest stock valuation of Textron (TXT)
So what is Textron (TXT) stock worth based on their 4th quarter 2020 earnings report? Based on their earnings report our valuation model provides a target price (full value price) for Textron at $63.70 a stock.
We therefore believe the stock of Textron is slightly undervalued at its current price of $44.61
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $63.70 thus a good entry point into Textron would be at $57.30 or below.
We expect the stock of Textron to kick up from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is undervalued at its current price
We therefore believe the stock of Textron is slightly undervalued at its current price of $44.61
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $63.70 thus a good entry point into Textron would be at $57.30 or below.
We expect the stock of Textron to kick up from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is undervalued at its current price
Next earnings release of Textron (TXT)
It is expected that Textron (TXT) will release their 1st quarter 2021 earnings report in late April 2021
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