Textron
TXT
$86.82
+1.65%
Textron is a diversified aerospace and defense conglomerate that designs, manufactures, and services specialty aircraft through its Textron Aviation (Cessna, Beechcraft) and Bell (commercial and military helicopters, tilt-rotor) segments, while Textron Systems supplies uncrewed aircraft, armored vehicles, and military training solutions. The company occupies a distinctive mid-cap niche in the Industrials sector — not a prime contractor on the scale of Lockheed or RTX, but a portfolio of leading general-aviation and rotorcraft brands with strong aftermarket service franchises and meaningful defense exposure. The current investor narrative centers on management's strategic pivot toward a pure-play aerospace and defense identity, with the announced divestiture of the Industrial segment (plastic fuel tanks, golf carts, ATVs) intended to sharpen the growth and margin profile of the remaining aviation and defense businesses. Recent quarterly results have reinforced the debate: Q3 EPS beat consensus estimates, but a revenue miss and persistent supply-chain and program-execution concerns — frequently contrasted unfavorably against peers like Howmet — have kept the stock range-bound and left investors weighing whether the portfolio simplification can unlock a re-rating.…
TXT
Textron
$86.82
Related headlines
Investment Opinion: Should I buy TXT Today?
Rating: Hold with a constructive bias toward accumulating on weakness. The core thesis is that Textron trades at a modest 11.58x forward PE and 10.77x EV/EBITDA on consensus FY EPS of $7.66, while the entire analyst target range ($92.00 low to $115.00 high, $101.27 average) sits above the current $83.54 — implying +10.1% to +37.7% upside — but low-single-digit 4.14% revenue growth and a 17.73% gross margin that is flat-to-down year over year mean the re-rating requires execution that has not yet been demonstrated. The 7 Buy / 9 Hold / 0 Sell split with a 2.19 recommendation mean captures this standoff: constructive coverage, tempered conviction.
Supporting evidence is valuation-led rather than momentum-led. The trailing PE of 17.0x compresses 32% to an 11.58x forward multiple, a PEG of 1.01 is among the more attractive readings in the dataset, and EV/Sales of 1.08x is low for a name with defense exposure and aftermarket service franchises. Free cash flow of $810 million on a ~$15.7 billion market cap yields roughly 5.2%, funding $239 million of Q3 and $209 million of Q2 buybacks from $1.696 billion of cash, with debt-to-equity of 0.54 and a current ratio of 1.84. Profitability is improving at the net line — Q3 net margin of 7.20% versus 6.50% a year ago on $270 million of net income — but gross margin of 17.73% versus 18.16% a year earlier and a 12.10% Q4 2025 trough show how thin the operating cushion is, and the 4.14% growth trails the double-digit momentum of commercial-aerospace peers like Howmet.
Three risks could invalidate the thesis: the Industrial divestiture closing at a disappointing valuation and removing ~$765 million of quarterly segment revenue without a commensurate margin lift; continued supply-chain and program execution slippage that pushes consensus FY EPS of $7.66 lower; and a revenue miss triggering downgrades from the 9 Hold-rated analysts at Citigroup, Morgan Stanley, and UBS, compressing the multiple further. The rating would upgrade to Buy on evidence of revenue growth accelerating above ~6-7% with gross margin recovering toward 19%, or on a decisive break above the $88.50 post-earnings gap zone; it would downgrade to Sell on a break below the $73-$76 October shelf that re-exposes the $71.87 low. Verdict: fairly valued to modestly undervalued versus its own history (17.0x trailing PE sits near the low end of a ~12.2x-25.4x multi-year band; 1.99x P/B is near the bottom of a 1.8x-2.7x range) and at a discount to premium-multiple aerospace peers — but the discount is partly deserved until growth and margins prove the pure-play pivot.
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TXT 12-Month Price Forecast
Textron presents a valuation-supported but execution-constrained setup: at 11.58x forward earnings and 10.77x EV/EBITDA the stock already discounts a lot of the growth that the 4.14% revenue pace and 17.73% gross margin have not yet delivered, while the $92.00 low target and 5.2% FCF yield limit downside. The pure-play pivot — divesting the ~$765 million-per-quarter Industrial segment to concentrate on Aviation ($1.68 billion) and Bell ($933 million) — is the single lever that could close the gap to premium-multiple peers, but the 9 Hold ratings and Neutral reiterations from Citigroup, Morgan Stanley, and UBS show the market wants proof before paying for it. Near-term technicals are mixed: the +14.39% one-month move and +19.38% relative strength versus SPY reflect the Q3 EPS beat, but the -5.6% fade from the $88.53 spike high and -4.03% YTD change versus SPY's +7.83% suggest profit-taking rather than a confirmed reversal. I would upgrade to bullish on a decisive break above $88.50 accompanied by revenue growth accelerating above 6% and gross margin recovering toward 19%, and downgrade to bearish on a break below $76 that re-exposes the $71.87 low or a Q4 gross margin repeat of the 12.10% trough.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Textron's 12-month outlook, with a consensus price target around $101.27 and implied upside of +16.6% versus the current price.
Average Target
$101.27
16 analysts
Implied Upside
+16.6%
vs. current price
Analyst Count
16
covering this stock
Price Range
$92 - $115
Analyst target range
Coverage is broad and moderately constructive: 15 analysts cover Textron with a distribution of 7 Buy, 9 Hold, and 0 Sell, yielding a consensus recommendation of "buy" but a recommendation mean of 2.19 (closer to Hold on a 1–5 scale where lower is more bullish). The average target price of $101.27 implies roughly +21.2% upside from the current $83.54, and notably the lowest target of $92.00 sits about 10.1% above the current price — meaning even the most cautious analyst sees upside. The consensus leans mildly bullish, but the 9 Hold ratings and the recent pattern of Neutral/Equal Weight reiterations from Citigroup, Morgan Stanley, and UBS suggest conviction is tempered by revenue-miss concerns and the pending portfolio restructuring.
The target range of $92.00 to $115.00 is moderately wide (roughly 25% spread from low to high), signaling meaningful uncertainty about the pace of the turnaround. The high target of $115.00 — about 37.7% above the current price — likely assumes successful Industrial divestiture, aviation upcycle tailwinds, margin expansion toward double digits, and multiple re-rating toward peer levels; the low target of $92.00 prices in continued low-single-digit growth and supply-chain friction but still embeds a modest recovery. Institutional ratings show a stable-to-cautiously-positive tilt — TD Cowen and Freedom Broker maintain Buy while most bulge-bracket firms stay Neutral — and the absence of any Sell ratings, combined with the fact that the entire target range sits above the current price, suggests the risk/reward skews favorably, though the heavy Hold contingent implies the stock may need a revenue acceleration catalyst to close the gap to consensus.
Bulls vs Bears: TXT Investment Factors
The bear case currently has slightly stronger near-term evidence: revenue grew only 4.14%, gross margin compressed to 17.73%, and the stock has underperformed SPY by 5.72% over a year while sitting at just 39% of its 52-week range. The bull case rests on valuation and optionality — an 11.58x forward PE, a 5.2% FCF yield, a $92 low target that is still 10.1% above the price, and a pure-play pivot that could re-rate the multiple. The single most important tension is whether the Industrial divestiture and aviation upcycle can lift revenue growth and margins toward peer levels; if they do, the discount closes, but if execution continues to disappoint, the discount persists and the stock stays range-bound. Analyst positioning (7 Buy, 9 Hold, 0 Sell, mean 2.19) captures this standoff precisely — constructive but unconvinced.
Bullish
- Entire analyst target range above price: The lowest analyst target of $92.00 sits 10.1% above the current $83.54, and the $101.27 average implies +21.2% upside. With 7 Buy, 9 Hold, and 0 Sell ratings, even the most cautious coverage embeds a recovery, which is an unusual setup that skews the risk/reward favorably.
- Forward PE compression signals earnings growth: The trailing PE of 17.0x collapses to a forward PE of 11.58x — a 32% compression — against consensus FY EPS of $7.66, implying the stock trades at roughly 10.9x forward earnings. A PEG of 1.01 and EV/EBITDA of 10.77x are modest for an aerospace and defense name with aftermarket franchises.
- Pure-play pivot could unlock re-rating: The announced Industrial divestiture removes roughly 20% of segment revenue ($765 million of the $3.75 billion quarterly total) and concentrates the portfolio in higher-margin Aviation ($1.68 billion) and Bell ($933 million). A cleaner aerospace and defense identity could narrow the valuation gap to premium-multiple peers like Howmet and GE Aerospace.
- Healthy balance sheet and 5.2% FCF yield: Debt-to-equity of 0.54 and a current ratio of 1.84 reflect conservative leverage, while trailing free cash flow of $810 million against a ~$15.7 billion market cap yields roughly 5.2%. The company funded $239 million of Q3 buybacks and $209 million in Q2 internally, with $1.696 billion of cash on hand.
Bearish
- Revenue miss and decelerating growth: Q3 revenue of $3.751 billion grew only 4.14% year over year, and the sequential trend is uneven ($3.827 billion in Q2, $3.695 billion in Q1, $4.175 billion in the prior Q4). The revenue miss alongside the EPS beat is precisely what has kept 9 of 15 analysts at Hold and conviction tempered.
- Thin, compressing gross margins: Gross margin of 17.73% was essentially flat versus 18.16% a year earlier and down from 18.13% in Q2 2026, while the Q4 2025 gross margin of just 12.10% shows how sharply mix and charges can swing results. A 6.22% trailing net margin and 6.76% operating margin leave little cushion if program execution slips.
- Persistent underperformance versus market: The 1-year relative strength of -5.72% versus SPY's +9.59% and YTD change of -4.03% versus SPY's +7.83% confirm chronic lag, with a peak-to-trough drawdown of roughly 29% from the $101.57 high to the $71.87 low. The stock sits at only ~39% of its 52-week range, having surrendered most prior gains.
- Unfavorable contrast with aerospace peers: Recent coverage explicitly frames Textron against Howmet, which is capitalizing on the commercial aerospace upcycle while Textron struggles with supply-chain issues and program uncertainties. Textron's 4.14% growth trails the double-digit momentum of commercial-aerospace pure-plays, justifying part of its 17.0x trailing PE discount.
TXT Technical Analysis
Textron is in a choppy, range-bound consolidation rather than a clean trend, with a 1-year price change of just +3.87% that masks a violent internal swing from a 52-week high of $101.57 down to a low of $71.87 — a peak-to-trough drawdown of roughly 29%, consistent with the reported max drawdown of -27.53%. At the current price of $83.54, the stock sits at approximately 39% of its 52-week range (($83.54 − $71.87) / ($101.57 − $71.87)), placing it in the lower-middle of the band — neither a momentum leader nor a deep-value falling knife, but a stock that has surrendered most of its prior gains and is attempting to rebuild. The 1-year relative strength of -5.72% versus SPY (+9.59%) confirms persistent underperformance despite the modest absolute gain.
Short-term momentum has turned sharply positive and is diverging from the longer-term trend: the 1-month change of +14.39% stands in stark contrast to the 3-month change of -6.59% and 6-month change of -8.21%, and the 1-month relative strength of +19.38% versus SPY's -4.99% is a dramatic outperformance burst. This divergence was catalyzed by the late-October earnings gap — the stock jumped from $78.32 on October 28 to $87.46 on October 29 (a single-session gain of roughly 11.7%) on the Q3 EPS beat — followed by a fade back to $83.54, suggesting the initial enthusiasm is being digested. The pullback from the post-earnings spike high of $88.53 to $83.54 (about -5.6% over five sessions) signals profit-taking rather than a clean breakout, and the YTD change of -4.03% versus SPY's +7.83% underscores that the recovery remains incomplete.
Key technical levels are well defined: support sits at the 52-week low of $71.87, with an intermediate shelf around $73–$76 where the stock based repeatedly in October, while resistance lies at the 52-week high of $101.57 and, more immediately, the post-earnings gap zone near $87–$88.50. A decisive break above $88.50 on volume would confirm the earnings gap as a genuine trend reversal and open a path toward the $92–$95 region; a failure that retests and breaks $76 would re-expose the $71.87 low and signal the rally was a dead-cat bounce. With a beta of 0.88, Textron is roughly 12% less volatile than the market, which tempers position-sizing risk but also means the stock needs company-specific catalysts — not broad market beta — to drive a sustained re-rating.
Beta
0.88
0.88x market volatility
Max Drawdown
-27.5%
Largest decline past year
52-Week Range
$72-$102
Price range past year
Annual Return
+5.8%
Cumulative gain past year
| Period | TXT Return | S&P 500 |
|---|---|---|
| 1m | +17.1% | -3.7% |
| 3m | -2.3% | -2.9% |
| 6m | -5.2% | +0.2% |
| 1y | +5.8% | +10.1% |
| ytd | -0.3% | +10.0% |
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TXT Fundamental Analysis
Revenue is growing modestly but decelerating in quality: Q3 2026 revenue of $3.751 billion rose 4.14% year over year versus $3.602 billion in Q3 2025, yet the sequential trend is uneven — Q2 came in at $3.827 billion, Q1 at $3.695 billion, and the prior Q4 at $4.175 billion — indicating a business that is expanding at a low-single-digit pace rather than accelerating. Segment mix shows Textron Aviation as the largest contributor at $1.68 billion, followed by Bell at $933 million, Industrial at $765 million, and Textron Systems at $360 million; the pending Industrial divestiture would remove roughly 20% of segment revenue and concentrate the portfolio in aviation and defense, which should improve the growth and margin optics of the remaining core. The 4.14% top-line growth is respectable for a mature aerospace conglomerate but trails the double-digit momentum seen at commercial-aerospace pure-plays, reinforcing the narrative of a company in transition rather than a high-growth compounder.
Profitability is solid but thin-margined and showing mild compression: Q3 net income of $270 million on $3.751 billion of revenue produced a net margin of 7.20%, up from 6.50% in the year-ago quarter ($234 million on $3.602 billion), while gross margin of 17.73% was essentially flat versus 18.16% a year earlier and down from 18.13% in Q2 2026. Operating income of $252 million (6.72% operating margin) and EBITDA of $423 million (11.28% EBITDA margin) reflect a business with meaningful fixed costs and working-capital intensity; the Q4 2025 gross margin of just 12.10% illustrates how quarterly mix and charges can swing results. The trailing net margin of 6.22% and operating margin of 6.76% are typical-to-slightly-below par for a diversified aerospace and defense manufacturer, and the modest year-over-year net-margin improvement suggests cost discipline is offsetting input and supply-chain pressure — but there is limited cushion if program execution slips.
Balance-sheet health is adequate and cash generation is improving: debt-to-equity of 0.54 and a current ratio of 1.84 indicate a conservatively levered, liquid balance sheet, while trailing free cash flow of $810 million against a $15.66 billion market cap implies an FCF yield of roughly 5.2% — a healthy level for an industrial. Cash flow is seasonal and working-capital-heavy (Q1 2026 operating cash flow was -$117 million and FCF -$250 million, versus Q3 FCF of +$324 million), but the company returned capital aggressively via $239 million of Q3 buybacks and $209 million in Q2, funded comfortably by operations. ROE of 11.70% and ROA of 4.51% are respectable but not exceptional, and with $1.696 billion of cash at quarter-end, Textron can fund growth and buybacks internally without meaningful external financing dependence.
Quarterly Revenue
$3.8B
2026-10
Revenue YoY Growth
+4.1%
YoY Comparison
Gross Margin
17.7%
Latest Quarter
Free Cash Flow
$810000000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is TXT Overvalued?
Because Textron is solidly profitable (Q3 net income of $270 million; trailing EPS positive), the PE ratio is the appropriate primary metric. The stock trades at a trailing PE of 17.0x versus a forward PE of 11.58x — a pronounced 32% compression that implies the market expects earnings to grow substantially, consistent with consensus FY EPS estimates of $7.66 against a current price of $83.54 (roughly 10.9x forward earnings). The PEG ratio of 1.01 suggests the trailing multiple is roughly in line with expected growth, while the EV/EBITDA of 10.77x and EV/Sales of 1.08x frame a valuation that is modest in absolute terms for an aerospace and defense name.
Against the broader Aerospace & Defense industry, Textron screens at a discount: its 17.0x trailing PE and 1.06x PS ratio compare favorably to premium-multiple peers such as Howmet and GE Aerospace, which trade at materially higher earnings multiples on stronger commercial-aerospace growth. The 1.99x price-to-book and 12.35x price-to-cash-flow are unremarkable, and the 1.08x EV/Sales is low for a company with defense exposure and aftermarket service revenue. The discount appears partly justified by Textron's low-single-digit revenue growth (4.14% YoY), thin 6.22% net margin, and program/supply-chain execution risk relative to higher-growth peers — but the gap also reflects an opportunity if the Industrial divestiture and aviation upcycle lift margins and growth toward peer levels.
Historically, Textron's valuation sits near the lower end of its own multi-year band: the trailing PE of 17.0x compares to a range of roughly 12.2x–25.4x over the past several years (with the 25.4x reading in Q4 2024 reflecting a depressed earnings base), and the PS ratio of 1.06x is well below historical readings that frequently exceeded 4x on a per-share basis in prior periods. The current 1.99x P/B is near the low end of its historical 1.8x–2.7x range, and the 1.01 PEG is among the more attractive readings in the dataset. This positioning suggests the market is pricing in modest expectations — leaving room for multiple expansion if the pure-play transformation delivers margin and growth improvement, but also warning that the discount could persist if execution disappoints.
PE
17.0x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 12x~25x
vs. Industry Avg
37.1x
Industry PE ~37.1x*
EV/EBITDA
10.8x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks center on thin margins and uneven execution. Gross margin of 17.73% is down from 18.16% a year ago, the trailing net margin is only 6.22%, and the Q4 2025 gross margin of 12.10% demonstrates how quickly mix and charges can erode profitability. Revenue growth of just 4.14% means there is little top-line cushion to absorb supply-chain or program cost overruns, and the pending Industrial divestiture removes roughly 20% of segment revenue ($765 million), creating transition risk and potential dis-synergies. Cash flow is also seasonal and working-capital-heavy — Q1 2026 operating cash flow was -$117 million and FCF -$250 million — so a weak first half could pressure the buyback cadence that supported the stock.
Market and competitive risks are dominated by the valuation gap and peer divergence. Textron trades at 17.0x trailing earnings versus premium-multiple peers like Howmet and GE Aerospace, and that discount is partly deserved given 4.14% growth and 6.22% net margins — but it can persist or widen if commercial-aerospace pure-plays keep compounding faster. With a beta of 0.88, the stock is ~12% less volatile than the market, meaning it needs company-specific catalysts rather than broad beta to re-rate; recent coverage explicitly contrasts Textron's supply-chain and program uncertainties against Howmet's upcycle leverage. The 9 Hold ratings and Neutral reiterations from Citigroup, Morgan Stanley, and UBS mean any revenue miss risks downgrades that could compress the multiple further.
Worst-case scenario: the Industrial divestiture closes at a disappointing valuation, aviation deliveries slip on supply-chain friction, and Q4 margins repeat the 12.10% trough, forcing consensus FY EPS of $7.66 lower. In that chain, the stock would retest the 52-week low of $71.87 — about -14.0% from the current $83.54 — and a break below the $73–$76 October shelf would confirm the post-earnings rally as a dead-cat bounce. A deeper drawdown toward the -27.53% max drawdown magnitude from the $88.53 post-earnings high would imply roughly $64, or about -23% from today. Even the analyst low target of $92.00 offers no downside protection in this scenario, since it sits above the current price.
FAQ
The most severe risk is margin and execution fragility: gross margin of 17.73% is down from 18.16% a year ago, the trailing net margin is only 6.22%, and the Q4 2025 gross margin of 12.10% shows how sharply mix and charges can swing results — a repeat would push FY EPS below the $7.45 low estimate. Second is the Industrial divestiture, which removes roughly 20% of segment revenue ($765 million of the $3.75 billion quarterly total) and could close at a disappointing valuation, creating transition risk without margin relief. Third is competitive and sector divergence: Textron's 4.14% growth trails double-digit commercial-aerospace momentum at Howmet and GE Aerospace, and with a beta of 0.88 the stock needs company-specific catalysts rather than market beta to re-rate. Fourth is analyst downgrade risk — 9 Hold ratings and Neutral reiterations from Citigroup, Morgan Stanley, and UBS mean a revenue miss could compress the multiple further, with the 52-week low of $71.87 about -14% below the current price and a max-drawdown-magnitude scenario implying roughly $64.
The base case carries 55% probability and a $92.00–$101.27 target range, assuming revenue growth holds near the 4.14% Q3 pace, gross margin stabilizes in the high-teens, consensus FY EPS of $7.66 is met, and the stock grinds toward the $101.27 average target as the 11.58x forward multiple slowly normalizes. The bull case at 25% probability targets $101.27–$115.00, requiring an accretive Industrial divestiture, aviation delivery acceleration, gross margin recovery toward 19%, and revenue re-acceleration into the mid-to-high single digits. The bear case at 20% probability targets $71.87–$83.54, driven by a Q4 margin repeat of the 12.10% trough, a discounted divestiture, and downgrades that retest the 52-week low. The base case is most likely, and its key assumption is that margins do not repeat the Q4 trough while the divestiture proceeds without a major stumble.
Textron screens as fairly valued to modestly undervalued on most measures. The trailing PE of 17.0x compresses 32% to an 11.58x forward multiple, a PEG of 1.01 is roughly in line with growth, and EV/Sales of 1.08x and EV/EBITDA of 10.77x are low in absolute terms for an aerospace and defense name. Against premium-multiple peers like Howmet and GE Aerospace, TXT trades at a clear discount — but that discount is partly deserved given 4.14% revenue growth, a 6.22% trailing net margin, and supply-chain execution risk. Versus its own history, the 1.99x P/B sits near the low end of a roughly 1.8x–2.7x range and the 17.0x trailing PE is toward the bottom of a multi-year band. The market is pricing in modest expectations, leaving room for multiple expansion if the pure-play pivot delivers, but also the risk that the discount persists.
The risk/reward is modestly favorable but not compelling enough to call it an outright buy at $83.54. The entire analyst target range of $92.00 to $115.00 sits above the current price, with the $101.27 average implying about +21.2% upside, and the 11.58x forward PE on consensus FY EPS of $7.66 is cheap for an aerospace and defense name with aftermarket franchises. Downside is cushioned by a 5.2% FCF yield on $810 million of trailing free cash flow, debt-to-equity of 0.54, and $1.696 billion of cash, but the bear case can retest the $71.87 52-week low — roughly -14% — if margins repeat the 12.10% Q4 trough. With 9 of 15 analysts at Hold and a 2.19 recommendation mean, the market is waiting for proof. It is a reasonable buy for value-oriented investors with a 12–18 month horizon who can tolerate range-bound action, and a poor buy for anyone seeking near-term momentum given the -5.6% fade from the $88.53 spike high.
Textron fits a medium-to-long-term holding period of at least 12–18 months rather than short-term trading. The catalyst that matters most — the Industrial divestiture and the resulting pure-play aerospace and defense re-rating — is a multi-quarter process, and the 9-Hold consensus means the multiple is unlikely to expand quickly without evidence of revenue acceleration above 6% and gross margin recovery toward 19%. The stock's beta of 0.88 makes it roughly 12% less volatile than the market, which limits the appeal for short-term traders, and the dividend yield of just 0.12% with a 2.06% payout ratio means there is essentially no income component to be paid while waiting. Earnings visibility is moderate — consensus FY EPS of $7.66 within a $7.45–$7.88 range — but quarterly volatility is real, as shown by the roughly 29% peak-to-trough drawdown from $101.57 to $71.87. A patient investor accumulating near the $73–$76 support shelf with a 12–18 month view is better positioned than one chasing the post-earnings gap.