How Did Textron Perform In Q2?

As expected, Textron (NYSE:TXT) managed to post rather optimistic financials this time around. Continuing with the momentum garnered through the beginning of the year, the company has reported steep jumps in both its revenue and earnings figures. Notably, earnings in the quarter came out to be about 87 cents, representing a near 53% jump from the year ago figure. The bottom line in the quarter was charged up on a better-than-expected top line performance in the quarter. Sales in the quarter increased by about 3.4%, primarily due to higher contributions from Bell, Textron Aviation, and Industrial segments.

Due to the conglomerate’s stellar performance in the year thus far, management has decided to raise its earnings guidance for the full year. Textron now expects earnings from continuing operations to come in the range of $3.15-$3.35 per share, representing an increase of about $0.20 per share from its previous outlook.

Despite the optimistic outlook and financial achievement thus far, we believe that the market price of about $67 is fair, and in line with our expectations as well. In this respect, we have created an interactive dashboard analysis to help best relay our method and reasoning. Don’t agree with us? Click on the link to change key drivers and come up with your own price estimate.

• Aviation was the star of the quarter yet again. In Q2, the segment managed to increase revenues by a significant 9%, or from about $1,171 in the same period last year to about $1,276 million. The improved performance is primarily a result of a better pricing environment and increased volumes. In the quarter under review, the business was able to deliver 48 jets, two more than last time, and about 47 commercial turboprops, up massively from 33 in the previous year. In terms of profits, the segment reported a remarkable 93% jump. This increase was primarily attributable to favorable volume, mix, and pricing. We expect the segment to continue to outperform through the remainder of the year as well.
• On the negative end of the spectrum, at Systems, the top line came in at $380 million, notably down from $477 million a year ago. This was mainly due to lower volumes at Weapons & Sensors related to the discontinuance of SFW production late last year. Further, the top line performance was also weighed down as lower TAPV deliveries at Textron Marine & Land Systems took a toll on the sales. That said, earnings in the quarter remained relatively stable in comparison, coming in at $40 million, down from $42 million a year ago.