Does Textron's Recent Aviation Growth Signal an Opportunity for 2025?

• Wondering if Textron’s current share price represents an opportunity? Let’s break down what has been happening and whether the numbers support your curiosity.
• Textron’s shares have risen 4.1% over the last week and 3.2% over the past month, showing some positive momentum, while its year-to-date return is 9.6%.
• Recent market moves appear to reflect investor reactions to new contract announcements and continued growth in Textron’s aviation division, both highlighted in the latest industry news. Strategic partnerships and product expansion have also drawn attention, contributing to the stock’s volatility and appeal.
• When looking at Textron’s valuation score, it checks in at 5 out of 6 for being undervalued. We will explore what goes into that number next, and provide a more detailed way to evaluate the company’s true value by the end of this article.

Find out why Textron's -2.3% return over the last year is lagging behind its peers.

Approach 1: Textron Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is a tool that estimates a company’s value by forecasting its future cash flows and discounting them back to their present value. This helps investors determine if a stock is trading below or above its true worth.

For Textron, the current Free Cash Flow is $668.8 million. Analysts estimate that Textron’s annual free cash flow will grow steadily over the next five years, with projections reaching $1.24 billion by 2029. The DCF analysis involves combining these analyst forecasts with longer-term projections, which are extrapolated based on recent growth trends and the company’s industry outlook. All estimates are calculated in US dollars.

Based on the latest model, Textron’s intrinsic value is calculated at $136.36 per share. This reflects a 39.1% discount compared to the current share price, which indicates the stock may be undervalued by the market at this time.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Textron is undervalued by 39.1%. Track this in your watchlist or portfolio, or discover 926 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Textron.

Approach 2: Textron Price vs Earnings (PE)

The Price-to-Earnings (PE) ratio is a favored valuation metric for profitable companies like Textron because it directly relates a company's market value to its earnings. Investors rely on the PE ratio to compare how much they are paying for each dollar of a company’s profits, making it particularly useful for established businesses with steady earnings.

What counts as a “normal” or “fair” PE ratio depends on several factors. Companies with higher expected earnings growth, lower risk profiles, or more stable profit margins typically command higher PE ratios. Slower-growing or riskier firms are valued at lower multiples.

Textron’s current PE ratio stands at 17.7x. When we look at benchmarks, this sits notably below both the aerospace and defense industry average PE of 38.4x and the average of its peers at 36.0x. At first glance, this might suggest Textron is trading at a discount compared to similar companies.

Simply Wall St’s proprietary Fair Ratio offers a more tailored approach. It calculates the most appropriate multiple for Textron by factoring in not just industry trends but also specific growth prospects, profit margins, market cap, and risks unique to the company. This Fair Ratio for Textron is 23.0x, which offers a more meaningful benchmark than simply comparing industry averages or peer multiples alone.

Comparing Textron’s current PE of 17.7x with its Fair Ratio of 23.0x, the company appears to be undervalued through the lens of this methodology.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1433 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Textron Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a simple, powerful way for investors to connect their story or perspective about a company, such as their forecasts for future revenue, earnings, and profit margins, to a financial forecast and ultimately arrive at their own fair value.

Narratives link a company’s story to the numbers, making it easier to see how changes in the real world, like news, earnings reports, or product launches, can impact both forecasts and valuation. Anyone can create and share these projections on Simply Wall St’s Community page, where millions of investors contribute, giving easy access to a variety of perspectives.

With Narratives, you can quickly compare your own Fair Value with the current share price to decide whether Textron is a buy or a sell. The process is updated dynamically any time key business facts or news change, so your outlook always stays current.

For example, some investors think Textron could be worth as much as $107.0 if new aircraft programs boost earnings above expectations, while others expect just $82.0 if margin improvements and revenue growth prove harder to achieve.

Do you think there's more to the story for Textron? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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