Earnings Preview: Textron Inc. - Analyst Blog
January 11 2012 - 9:15AM
Zacks
Diversified U.S. conglomerate, Textron Inc.
(TXT) is slated to report its fourth quarter 2011 financial results
before markets open on January 25. The current Zacks Consensus
Estimate for the quarter is 36 cents a share. The Zacks Consensus
estimates revenue at $3,286 million.
Third-Quarter 2011, a Synopsis
Backed by a rejuvenated business jet market leading to higher
volumes, Textron announced third quarter 2011 adjusted earnings of
45 cents per share, handsomely beating the Zacks Consensus Estimate
of 31 cents. The quarterly result also exceeded year-ago earnings
of 13 cents.
Textron clocked quarterly revenues of approximately $2.8 billion
which came in line with the Zacks Consensus Estimate. Revenues also
beat the year-ago figure of $2.5 billion by 13.5%. The
year-over-year rise in revenues was mainly attributable to a higher
top line in the Cessna Division. The quarter witnessed higher
revenues across the board barring the Finance segment.
Management Guided
Textron riding on bullish top-line growth prospects across its
manufacturing segments now forecasts 2011 earnings per share from
continuing operations in the range of $1.05 – $1.15.
Fourth-Quarter 2011 Zacks Consensus
The analysts, considered by Zacks, expect Textron to post
fourth-quarter 2011 earnings of 36 cents a share. The current Zacks
Consensus Estimate reflects an estimated growth of 8.48% from the
prior-year quarter’s earnings. The current Zacks Consensus
Estimates for the quarter range between 22 cents and 51 cents.
Zacks Agreement & Magnitude
Of the 10 analysts following the stock, only 1 analyst revised
the estimate downward, while none of them revised the same upward
in the last 30 days. As a result the Zacks Consensus Estimate
shrunk by a penny in the last 30 days to 36 cents. In the last 7
days, none of the analysts revisited their estimates, thereby
keeping the Zacks Consensus Estimate unchanged.
Mixed Earnings Surprise History
With respect to earnings surprises, Textron has missed as well
as topped the Zacks Consensus Estimate over the last four quarters
in the range of negative 41.18% to positive 45.16%. The average
remained at positive 13.00%. This suggests that Textron has
exceeded the Zacks Consensus Estimate by an average of 13.00% in
the trailing four quarters.
Price Stats
Since its last earnings release on October 19, 2011, Textron’s
market price increased 8.6% to $20.17 as of January 10, 2012.
During trading hours on January 10, the stock reached the day low
of $19.29 and the day high of $20.26. The stock price is within the
range of the 52-week low-high range of $14.66 attained on August
26, 2011 and $28.87 achieved on February 18, 2011.
Textron Bullish On Commercial Aerospace
Based in Providence, Rhode Island, Textron Inc. is a global
multi-industry company that manufactures aircraft, automotive
engine components and industrial tools.
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 with
commercial business through 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’s balance sheet remains stable with a long-term
debt-to-capitalization of 60.4% at the end of the first nine months
of 2011. The company also ended the quarter with cash holdings of
$1.5 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
remains stable with $3.9 billion of total debt, down $500 million
from the end of the first half of 2011.
Textron currently retains a Zacks #2 Rank, which translates into
a short-term Buy rating. This is in sync with its diversified
conglomerate peers like Honeywell International Inc.
(HON) andCarlisle Companies
Incorporated (CSL).
CARLISLE COS IN (CSL): Free Stock Analysis Report
HONEYWELL INTL (HON): Free Stock Analysis Report
TEXTRON INC (TXT): Free Stock Analysis Report
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