It has been about a month since the last earnings report for Textron (TXT). Shares have lost about 7.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Textron due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Textron Posts Better-Than-Expected Q4 Earnings, Misses on Revenues
Textron Inc. reported fourth-quarter 2024 adjusted earnings of $1.34 per share, which beat the Zacks Consensus Estimate of $1.25 by 7.2%. However, the bottom line declined 16.3% from $1.60 in the year-ago quarter.
The company reported GAAP earnings of 76 cents per share, down from $1.61 reported in the fourth quarter of 2023.
The company reported 2024 adjusted earnings of $5.48 per share, which surpassed the Zacks Consensus Estimate of $5.42. However, the bottom line declined 2% from $5.59 reported in the year-ago quarter.
The company reported total revenues of $3.61 billion, which missed the Zacks Consensus Estimate of $3.74 billion by 3.5%. Moreover, revenues decreased 7.2% from the year-ago quarter’s level of $3.89 billion.
Manufacturing revenues improved 7.2% year over year to $3.60 billion.
The company reported 2024 revenues of $13.70 billion, which missed the Zacks Consensus Estimate of $13.83 billion. The bottom line, however, improved 0.1% from $13.68 billion in the year-ago quarter.
Textron Aviation: Revenues from this segment declined 15.9% year over year to $1.28 billion. This was primarily due to lower volume, which was principally a result of production disruptions related to the labor strike.
The segment generated an operating profit of $100 million compared with $193 million in the year-ago period. This decline can be attributed to lower volume and mix as well as manufacturing inefficiencies, which included idle facility costs and higher costs associated with the labor disruption resulting from the strike.
Textron Aviation delivered 32 jets, down from 50 in the year-ago quarter. It also delivered 38 commercial turboprops, down from 44 in the fourth quarter of 2023.
The segment’s order backlog at the end of the quarter totaled $7.8 billion.
Bell: Revenues from this segment amounted to $1,129 million, up 5.4% from the year-ago quarter’s registered number. This was driven by increased military revenues, primarily related to the FLRAA program.
The segment’s profit declined 6.8% to $110 million due to lower volume on the V-22 program.
Bell delivered 78 commercial helicopters, down from 91 last year. Its order backlog at the end of the quarter totaled $7.5 billion.
Textron Systems: This segment’s revenues amounted to $311 million, down 1% from the year-ago quarter’s registered number.
The segment’s profits totaled $42 million, up 20% from the prior-year figure.
Textron Systems’ backlog at the end of the quarter totaled $2.6 billion.
Industrial: Revenues from this segment declined 9.6% to $869 million due to lower volumes and mix, notably in the Specialized Vehicles product line.
Moreover, the segment’s profit totaled $48 million compared with $57 million in the prior-year quarter. The decline can be attributed to lower volumes and mix.
Textron eAviation: Revenues from the segment totaled $11 million, up 10% year over year. It reported a loss of $18 million, narrower than $22 million in the prior-year period.
Finance: This segment’s revenues declined 8.3% to $11 million. Its profit totaled $5 million compared with $4 million in the year-ago period.
As of Dec. 28, 2024, cash and cash equivalents totaled $1.39 billion compared with $2.12 billion as of Dec. 30, 2023.
Cash flow from operating activities in 2024 amounted to $1.01 billion compared with $1.27 billion in the year-ago period.
Capital expenditures amounted to $153 million compared with $178 million in the prior-year period.
The long-term debt totaled $2.89 billion as of Dec. 28, 2024, compared with $3.17 billion as of Dec. 30, 2023.
Textron issued its 2025 adjusted earnings per share (EPS) outlook. The company expects adjusted EPS to be in the range of $6.00-$6.20. The Zacks Consensus Estimate for earnings is pegged at $6.53 per share, which lies above its guided range.
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -13.26% due to these changes.
At this time, Textron has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Textron has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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