Textron Inc. (TXT): what the price requires
At today's price, Textron Inc. (TXT) is priced for +4.4% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/TXT
Headline
| Field | Value |
|---|---|
| Ticker | TXT |
| Company | Textron Inc. |
| Sector / Industry | Industrials / Aerospace & Defense |
| Current price | $89.25/sh |
| Composition | Aircraft 27% / Aftermarket parts and services 14% / Military aircraft and support programs 18% / Commercial helicopters, parts and services 11% / Textron Systems 8% / Fuel systems and functional components 13% / Specialized vehicles 9% / Textron eAviation 0% / Finance 1% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | segment |
| Implied growth | 4.4% |
Solve inputs: computed at a 11.2% cost of capital with 6% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6pp.
How unusual the bet is: within-range (limited comparison data)
| Reference | Value |
|---|---|
| cohort percentile (of 225 peers) | 11 |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.48x | 4 | expensive |
| Earnings | 6.12x | 4 | expensive |
| Relative | 2.83x | 4 | expensive |
| Growth | 0.63x | 3 | justifies |
Families that justify the price: Growth Families that call it expensive: Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.8%); the inversion above states its own rate.
Per-Model Detail (n=15)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $160.88 | 0.55x | yes | FCF base $0.9B, growth 9% (input: historical growth), terminal g 4.0%, WACC 7.8%, 6yr projection |
| DCF Exit Multiple | Growth | $142.32 | 0.63x | yes | Exit EV/EBITDA: 52.9x / 54.9x / 56.9x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $75.55 | 1.18x | yes | P/E 22x (static sector reference · 2026-04), scenarios: 18.4x / 22.0x / 25.6x (bear / base = reference held flat / bull), EV/EBITDA 26.26x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $57.31 | 1.56x | yes | BV/sh $45.42, ROE (TTM) 11.7%, ke 9.3% |
| Two-Stage Excess Return | Asset | $64.06 | 1.39x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $101.26 | 0.88x | yes | Rev $15.2B, growth 9% (input: historical growth; tapered), Terminal P/S: 0.9x / 1.0x / 1.2x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $15.00 | 5.95x | yes | EPS $1.25, growth 11% (input: historical EPS growth), PEG=1.58 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | $65.40 | 1.36x | yes | BV $45.42 + 5yr PV of (ROE (TTM) 11.7% − Kₑ 9.3%) × BV; BV grows 7.6%/yr |
| Graham Number | Asset | $35.74 | 2.50x | yes | √(22.5 × EPS $1.25 × BVPS $45.42) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $0.01 | 8924.50x | yes | EBITDA $0.41B × sector EV/EBITDA 14.0x (excluded from median) |
| FCF Yield | Earnings | $15.85 | 5.63x | yes | FCF $859.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $13.40 | 6.66x | yes | SBC-adj FCF $0.82B (FCF $0.86B − SBC $0.04B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $31.16 | 2.86x | yes | EPS $1.25 × (8.5 + 2×10.6%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $172.42 | 0.52x | yes | Revenue $15.19B × sector P/S 2.0x |
| PEG Fair Value | Relative | $19.91 | 4.48x | yes | EPS $1.25 × (PEG 1.5 × growth 10.6% (input: historical EPS growth)) → PE 15.9x |
| Earnings Yield | Earnings | $13.51 | 6.61x | yes | EPS $1.25 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $0 |
| Net debt / NOPAT (after-tax) | 0.00x |
| Net debt / operating income (pre-tax) | 0.00x |
| Share count CAGR (buyback) | -5.4% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- Textron is a portfolio of aviation and defense franchises, Cessna and Citation jets, Bell helicopters, and Textron Systems, and it is reshaping itself: management plans to separate the Industrial segment, leaving a backlog the company says is 100% aerospace-and-defense at $19.2 billion post-separation.
- The core strength is order visibility: Textron Aviation ended the first quarter with an $8.0 billion backlog and Bell with $7.6 billion, the multi-year revenue cushion that makes this cyclical less cyclical than its history.
- At about 17 times trailing earnings, below the aerospace-and-defense sector median, and with $779 million of buybacks over the trailing year absorbing 83% of net income, the story is capital-return plus a Bell defense ramp; watch the July 28 second-quarter print and Aviation margin progression.
Bull Case
The balance sheet tells you how management reads its own stock. Over the trailing year Textron spent $779 million buying back shares, about 83% of net income, while paying a token dividend that consumes barely 1.5% of earnings. That is a deliberate choice: return nearly all the free cash through repurchases rather than a dividend, which for a company trading at roughly 17 times earnings, below its sector, is a bet by management that the shares are worth more than the market pays. Book value is $45.42 per share, leverage is moderate and well covered, and free cash flow of $859 million converts at 92% of net income. Share count is falling. A company buying back this aggressively at a below-sector multiple is compounding per-share value even if the top line only grows modestly.
The operating engine behind that cash is the aviation franchise and its backlog. Textron Aviation revenue grew 22% in the first quarter of 2026 on 37 Citation jet deliveries, up from 31, and 35 commercial turboprops, with segment profit up 26%. The durable part is what comes after the sale: the 10-K describes Textron Aviation's service network of more than 20 owned service centers plus "more than 300 authorized independent service centers" providing 24-hour parts and maintenance support (accession 0000217346-26-000006). Every jet sold becomes decades of high-margin aftermarket revenue, and the $8.0 billion Aviation backlog means the factory is spoken for well ahead.
The defense side adds a second growth leg the market is only starting to credit. Bell carries a $7.6 billion backlog and is ramping the U.S. Army's Future Long-Range Assault Aircraft program, the largest Army aviation award in a generation. Company-wide backlog rose to $19.2 billion, and the planned Industrial separation would leave a cleaner, pure aerospace-and-defense Textron whose two engines, business-jet cycle recovery and a multi-decade defense program, run on different clocks. The bull case is a cash-returning aerospace compounder with a fresh defense ramp, priced below its defense-prime peers.
Bear Case
The structural truth a Textron holder would rather not face is that this is a collection of good businesses without a single dominant one, and most of them ride cycles the company does not control. Business-jet demand, Bell's commercial helicopters, and the specialized-vehicle lines all move with the economy, and the 10-K says so plainly: changes in economic conditions "have in the past caused, and in the future may cause, customers to request that firm orders be rescheduled, deferred or cancelled" (accession 0000217346-26-000006). A backlog is a cushion, not a contract carved in stone, and in a downturn business-jet buyers are exactly the customers who defer. The first quarter already showed the volatility inside the portfolio: while Aviation grew 22%, Bell delivered 20 commercial helicopters, down from 29, and Bell segment profit fell 26% on unfavorable mix. The parts do not move together, which smooths results but also means no single engine is reliably carrying the company.
The valuation math is more demanding than the low headline P/E suggests. The methods that credit only demonstrated economics read the price as rich: the asset-value lens and the peer-multiple lens both land below today's $90.91, and only the forward-growth projection reaches it. Reading the price through its aviation segment, today's level embeds operating growth of about 6.2% a year for five years, which the framework calls within range but which still requires the business-jet up-cycle to persist without the demand deferrals the filing warns about. This is a moderate-return industrial, an 11.7% return on equity and a 6% net margin, being asked to compound steadily through a cycle that has historically not cooperated.
The electric-aviation venture is the quiet capital drain worth naming. Textron eAviation, including Pipistrel and its Nuuva V300 hybrid-electric aircraft (accession 0000217346-26-000006), has consumed development spending for years with negligible revenue, and effective the start of fiscal 2026 the company folded it into other segments rather than continue reporting it separately, a move that stops isolating its losses for investors to see. Meanwhile the aggressive buyback, 83% of net income, leaves less cushion if the aviation cycle turns and Bell's commercial softness spreads; buying back stock near the top of a cyclical is a bet that can look expensive in hindsight. The bear case is not that Textron is broken; it is that a cyclical, multi-business industrial with no dominant franchise is being valued as a steady defense compounder, and the cycle has a vote.
Valuation
Textron is best read through the segment carrying its priced-in premium, Textron Aviation, and there the bet is modest. At $90.91 (July 11, 2026), the price implies Aviation operating growth of about 6.2% a year for five years, which the framework labels within range and places in the lower half of its peer multiple range. This is not a stretched growth assumption; it is a bet that the business-jet up-cycle and the aftermarket annuity behind it keep delivering mid-single-digit growth, against a backdrop where the 10-K warns economic swings can cause customers to defer or cancel orders (accession 0000217346-26-000006). The read carries high confidence in the inputs, which is worth stating for a multi-segment company where a single blended margin would mislead.
The method families split the way they do for any company whose value rests on a franchise rather than its book. The asset-value and peer-multiple methods read the price as above what they support, and only the forward-growth projection reaches it, which the framework characterizes as a durability premium the static frames structurally cannot price. One coherence note keeps the reader from a false alarm: the reported EV/EBITDA looks extreme because operating income and EBITDA are not cleanly tagged in this issuer's filings, so that particular multiple is unreliable here and should be set aside. The cleaner cross-check is the price-to-earnings multiple: at about 17 times trailing earnings against an aerospace-and-defense sector median near 22, Textron trades below its peer group, which is the opposite of the rich signal the mistagged EV/EBITDA implies. The filing-sourced anchors that matter are the backlog and the aftermarket network, the more than 300 authorized service centers supporting the installed fleet (accession 0000217346-26-000006).
Solvency is sound: leverage is moderate and well covered, and free cash flow of $859 million converts at 92% of net income for a 5.4% free-cash-flow yield. Two basis notes keep the numbers honest. The dividend is immaterial to the thesis, $0.08 per share annualized at a 1.5% payout, because Textron returns cash almost entirely through buybacks, $779 million over the trailing year at 83% of net income, not dividends. And the U.S. carries 89% of revenue, growing over 21% over three years, so this is a domestic aerospace-and-defense story with a small international tail, not a globally diversified one. What the buyer at $90.91 is underwriting is that Aviation's mid-single-digit growth holds and Bell's defense ramp offsets its commercial softness, at a price that its own earnings multiple, below the sector, does not treat as demanding, even as the growth-dependent methods flag that the premium rests on the cycle cooperating.
Catalysts
The April 30 first-quarter report beat and reframed the company. Revenue of $3.7 billion grew 12%, segment profit rose 10% to $320 million, and adjusted EPS of $1.45 was up 13% (GAAP EPS was $1.25). Textron Aviation led with revenue up 22% on 37 Citation and 35 turboprop deliveries and segment profit up 26%, while Bell was the soft spot, delivering 20 commercial helicopters against 29 a year earlier with segment profit down $18 million on mix. The strategic headline was structural: management announced plans to separate the Industrial segment, after which company-wide backlog of $19.2 billion is described as 100% aerospace and defense.
The forward calendar has clear markers. The second-quarter report is due July 28, 2026, and management has guided to sequential improvement in Aviation deliveries and margin through the year, peaking in the fourth quarter. Bell's Future Long-Range Assault Aircraft program is the multi-year defense catalyst, expected to build revenue and scale efficiency as it ramps. Effective the start of fiscal 2026, Textron folded its eAviation electric-aircraft activities, including Pipistrel, into other segments rather than reporting them separately (accession 0000217346-26-000006). Analyst sentiment is mildly constructive, with the mean price target near $103, roughly 12% above the current price, a target that credits the Aviation margin ramp and the Bell defense build without pricing in a business-jet downturn. The near-term swing factors are the July print, the pace of the Industrial separation, and whether Bell's commercial weakness is a one-quarter mix issue or a trend.
Peer Cohorts (Per Segment, With Filing Citations)
Textron Aviation / Bell / Textron Systems (reported)
- RTX (RTX CORPORATION)
- (no filing in the citation store)
- GD (GENERAL DYNAMICS CORPORATION)
- (no filing in the citation store)
- NOC (NORTHROP GRUMMAN CORP /DE/)
- (no filing in the citation store)
- LMT (LOCKHEED MARTIN CORPORATION)
- (no filing in the citation store)
Industrial / Finance (reported)
- RTX (RTX CORPORATION)
- (no filing in the citation store)
- GD (GENERAL DYNAMICS CORPORATION)
- (no filing in the citation store)
- HON (Honeywell International Inc)
- (no filing in the citation store)
- LMT (LOCKHEED MARTIN CORPORATION)
- (no filing in the citation store)
- NOC (NORTHROP GRUMMAN CORP /DE/)
- (no filing in the citation store)
- LHX (L3HARRIS TECHNOLOGIES, INC.)
- (no filing in the citation store)
- TDY (TELEDYNE TECHNOLOGIES INC)
- (no filing in the citation store)
- DRS (Leonardo DRS, Inc.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Q1 2026 earnings, April 2026 · anchored filing data · Q1 2026 earnings release, April 2026 · Q1 2026 commentary and program coverage, 2026 · Q1 2026 8-K, April 2026 · Q1 2026 earnings call, April 2026 · analyst consensus, 2026