What To Expect From Textron’s Q4 Earnings

by Trefis Team
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Textron (NYSE:TXT) posted a rather mixed quarter last time around. While earnings came in higher than expected, revenues fell short of the analyst estimates marginally. That said, overall revenues came in 7% higher than the year ago figure on better performances at Bell, Industrial, and Textron Systems segments. In general, financials in the year have been hurt on deteriorating global economic conditions, rising oil prices, and increasing competitive pressures. Similar conditions are expected to carry into Q4 and beyond as well.

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It is for this reason that the company has decided to lower the upper end of its guidance for FY 2017. Management now expects the company to generate earnings in the range of $2.40-$2.50 per share, in comparison to the previous guidance range of $2.40-$2.60 per share.

  • Industrial has been an out-performer for most of the year on the inclusion of Arctic Cat in its books. However, Q3 witnessed a fall in output, especially at the vehicles business. Additionally, margins were seen shrinking as well. We can expect similar conditions to persist in Q4 as well.
  • Business at Aerospace suffered at the hands of lower-than-expected increases in military and commercial turboprop volumes in the last quarter. That said, international deliveries improved significantly. We expect this momentum in the international space to improve in Q4. Additionally, the Citation Latitude aircraft continues to remain the best-selling midsize aircraft in the market. We expect sales here to help offset some of the losses domestically.
  • On the positive side, Bell has seen better than expected growth towards the second half of the year. With the steady increases in oil prices, we expect to see this momentum continue into Q4 as well. We can expect the segment to increase deliveries this time around, while profits improve on favorable performance. Additionally, we expect the order backlog to see a jump on new orders.

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