VALUATION HIGHLIGHTS

1. Textron Aviation constitutes 49% of the Trefis price estimate for Textron's stock.
2. Bell constitutes 20% of the Trefis price estimate for Textron's stock.
3. Industrial & eAviation constitutes 16% of the Trefis price estimate for Textron's stock.

WHAT HAS CHANGED?

Latest Earnings: Q4 and Full Year 2025

Textron reported a strong fourth quarter with revenue of $4.2 billion, a 16% increase year-over-year, and adjusted EPS of $1.73, up 29% from $1.34 in the prior year. For the full year 2025, revenue reached $14.8 billion (up 8%) while adjusted EPS grew to $6.10. Performance was primarily driven by a massive recovery in Textron Aviation following 2024 strike disruptions and 20% growth in Bell military revenues. However, the stock faced pressure due to a 2026 cash flow outlook of $700-$800 million, which is lower than the $969 million achieved in 2025, reflecting heavy capital investments in the MV-75 program.

Note: Textron's FY'25 ended on January 3, 2026.

Bell MV-75 Program Acceleration

The U.S. Army's Future Long-Range Assault Aircraft (FLRAA) program, officially designated as the MV-75, has been pulled forward by 2-3 years. Textron is significantly increasing capital expenditures to approximately $650 million in 2026 to support long-lead materials and production readiness. While this acceleration requires higher upfront investment and may result in a one-time unfavorable catch-up adjustment of $60-$110 million upon the award of the initial production contract, it significantly derisks the long-term revenue pipeline for the Bell segment as it prepares to replace the Black Hawk fleet.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below are key drivers of Textron's value that present opportunities for upside or downside to the current Trefis price estimate:

Textron Aviation

• Backlog and Deliveries: The Aviation segment ended 2025 with a robust $7.7 billion backlog. With the production line now stabilized post-strike, Textron is targeting 2026 revenue of $6.5 billion. If the company maintains its 11-12% margin guidance despite inflationary pressures, there is significant upside potential as high-margin Gen2 and Gen3 Citation jets enter service.


• Aftermarket Growth: Aftermarket service revenue grew 6% to $2.03 billion in 2025. This recurring revenue stream provides a cushion against cyclical swings in aircraft sales. Trefis estimates assume steady growth here; any acceleration in fleet utilization could drive margins higher than current projections.

For additional details, select a division from the interactive Trefis split for Textron at the top of the page.

BUSINESS SUMMARY

Textron is a multi-industry company that leverages a global network of aircraft, defense, industrial, and finance businesses to provide innovative solutions and services. The company is best known for its powerful brands such as Bell, Cessna, Beechcraft, and Pipistrel, operating through segments that include Textron Aviation, Bell, Textron Systems, and Industrial.

SOURCES OF VALUE

Textron's value is primarily anchored in its dominant position within the general aviation and military rotorcraft markets.

Aviation Market Leadership

Textron Aviation is the largest segment by revenue, supported by a massive installed base of Cessna and Beechcraft aircraft. This large fleet creates a high-margin, "sticky" aftermarket service business that accounts for roughly one-third of the segment's revenue, providing stability across economic cycles.

Bell Military Transformation

The Bell segment is transitioning from a reliance on the V-22 Osprey to the MV-75 (V-280 Valor). Winning the FLRAA contract provides Bell with a decades-long production runway, effectively securing its role as a primary supplier for the U.S. Army's next-generation vertical lift capabilities.

KEY TRENDS

U.S. Army Modernization

The shift toward the MV-75 program represents a major macro trend in defense spending focused on long-range, high-speed assault capabilities. Textron is the primary beneficiary of this multi-billion dollar pivot, though the transition involves temporary margin compression due to R&D and early-stage production scaling.

Portfolio Streamlining

Textron has aggressively optimized its portfolio by divesting the underperforming Powersports business (Arctic Cat) and folding its eAviation unit into the Aviation and Systems segments. This strategic shift focuses capital on high-return aerospace and defense programs rather than speculative or lower-margin industrial lines.

Aggressive Capital Allocation

Management continues to prioritize shareholder returns through buybacks, having repurchased $822 million in shares during 2025. This strategy, combined with a disciplined debt maturity profile, aims to support EPS growth even during periods of heavy capital reinvestment.