What To Expect From Textron’s Q1 Earnings

by Trefis Team
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Textron (NYSE:TXT) posted a rather mixed earnings last time around. Both the revenues and earnings figures failed to beat the consensus estimates by a notable margin. The company’s revenues were hurt on sustained underperformance at Aviation. That said, on a year over year basis, the company actually managed to increase the top line by over 5% on the back of better than expected results at Bell.

In general, financials in the previous few quarters have been hurt on deteriorating global economic conditions, rising oil prices, and increasing competitive pressures. That said, with a reversal in global trends, management expects things at the company to improve going forward. In this respect, in 2018, the company expects to post revenues in the amount of $14.6 billion for the full year, while earnings come in the range of $2.95 to $3.15. Additionally, like many of its competitors, the tax cut is expected to benefit Textron greatly going forward. It expects the percentage to be around 22.5% this year.

At the moment, we believe Textron’s current price to be undervalued by about 9%. In this respect, we have created an interactive dashboard analysis to estimate the company’s valuation based on its expected revenue for FY 2018. Click on the link to modify the figures to arrive at your own price estimate.

  • Things at Aviation have been quite slow in the last few quarters. The segment has shown consistent declines in year over year revenues. In general, military orders, while showing some signs of improvement, are still lagging quite a bit. We expect such a scenario to hurt revenues at the segment this time around, as well. That said, the good news is that, while military orders take a hit, the company managed to receive higher commercial orders through most of the second half of 2017. We expect this trend to continue well into 2018, with management expecting revenues at the division to cross $5 billion through the year.
  • While military orders suffer at Aviation, increased military volumes have helped push revenues at Bell significantly over the last couple of quarters. We expect this trend to help boost the top line through most of 2018. That said, it must be noted that commercial volumes at the segment are still hurting, and are expected to do the same in Q1, potentially offsetting the gains at military. Additionally, we can expect this unfavorable mix to hurt earnings at the segment as well.

 

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