Textron (NYSE:TXT) Q3 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

Textron Inc. (NYSE:TXT) is scheduled to report Q3 earnings results on October 29, 2020.

The company is expected to report earnings of $0.36/share on revenue of $2.807 billion. The consensus earnings per share (EPS) of $0.36/share is based on a poll of 12 analysts and represents a decline in eps of −61.9% over the same quarter last year, when the company reported earnings of $0.95/share.

The revenue forecast of $2.807 billion based on a poll of 9 analysts implies a year-over-year (YoY) decline in revenue of −13.9%. Last year the company reported $3.259 billion in revenue for the quarter.

Expected to report EPS contraction of −61.9% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $2,807.02 $3,259.00 −13.9%
EPS $0.36 $0.95 −61.9%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, and missed expectations 2 quarters.

What are your expectations from Textron Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.09 $0.13 248.4% Beat
Q1, 2020 $0.47 $0.35 −25.8% Missed
Q4, 2019 $1.08 $1.11 2.6% Beat
Q3, 2019 $0.86 $0.95 10.3% Beat
Q2, 2019 $0.86 $0.93 8.5% Beat
Q1, 2019 $0.68 $0.76 11.5% Beat
Q4, 2018 $0.98 $1.15 17.5% Beat
Q3, 2018 $0.76 $0.61 −20.0% Missed

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending July 4, 2020, the stock price reacted by increasing 2.0%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 30, 2020 $34.27 $34.94 2.0% Increase
April 30, 2020 $30.02 $26.22 −12.7% Decline
January 29, 2020 $45.70 $46.93 2.7% Increase
October 17, 2019 $50.47 $46.01 −8.8% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.82, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.82 implies a 0.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

Textron Inc. is currently trading at $34.01/share, down −3.4% for the day. The company is trading at approximately 66.0% of its 52-week high of $51.53/share. The company’s stock price is down −2.7% since the last earnings report and down −2.8% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 33.90 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:TXT Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 20.57 and a forward P/E multiple of 23.95.

Textron Inc.’s current share price also implies a price-to-book (P/B) multiple of 1.40. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date July 4, 2020
Stock Price (Current) $34.01
P/E Ratio 20.6x
P/E Ratio (Fwd) 23.9x
PEG Ratio −0.3
Total Debt / Total Capital 38.4%
Levered Free Cash Flow $623 million
EV / EBITDA 8.9x

Finbox

Textron Inc. is a mid-cap stock with a market capitalization of $7.755 billion and a total enterprise value of $10.572 billion. The company operates in the Industrials sector and the Aerospace & Defense industry.

Textron Inc. operates in the aircraft, defense, industrial, and finance businesses worldwide. The company’s Textron Aviation segment manufactures, sells, and services business jets, turboprop and piston engine aircraft, and military trainer and defense aircraft; and commercial parts, as well as offers maintenance, inspection, and repair services. Its Bell segment supplies military and commercial helicopters, tiltrotor aircraft, and related spare parts and services. The company’s Textron Systems segment offers unmanned aircraft systems, unmanned surface systems, mission command hardware and solutions, and customer support and logistics services; simulation, training, and other defense and aviation mission support products and services; airborne and ground-based sensors and surveillance systems, and protection systems; precision guided weapons systems; marine craft, armored vehicles, and specialty vehicles used for fire and rescue applications; test equipment, electronic warfare test, and training and intelligence software solutions; and piston aircraft engines, as well as designs, develops, manufactures, installs, and maintains full flight simulators. Its Industrial segment offers blow-molded plastic fuel systems, including conventional plastic fuel tanks and pressurized fuel tanks for hybrid applications, clear-vision systems, and plastic tanks for catalytic reduction systems primarily to automobile OEMs; and golf cars, off-road utility vehicles, recreational side-by-side and all-terrain vehicles, snowmobiles, light transportation vehicles, aviation ground support equipment, professional turf-maintenance equipment, and turf-care vehicles to golf courses and resorts, government agencies and municipalities, consumers, outdoor enthusiasts, and commercial and industrial users. The company’s Finance segment provides financing to purchase new and pre-owned aircraft and helicopters. Textron Inc. was founded in 1923 and is headquartered in Providence, Rhode Island.

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