# Textron (TXT)

Sector: Aerospace and defense

| Field | Value |
|---|---|
| Price | $75.93 |
| Fair value (Analysts) | $100.00 |
| Discount to fair value | 24.1% |
| Fair value uncertainty (Analysts) | Medium |
| Economic moat (Analysts) | None |
| LSEG analyst rating (1 strong buy to 5 strong sell) | 2.35 |
| Data as of | 2026-10-16 |
| Next earnings | 2026-10-29 (confirmed) |

## In short

The market prices Textron for slow profit growth and the funding risk on the MV-75 Cheyenne, and secure funding with more jet deliveries and the Industrial separation can close the gap.

## Themes and gap

- Themes: Tariffs and trade (trade-tariffs)
- Gap type: Can close (closable)
- Why: The Q3 2026 report on October 29, 2026, the MV-75 funding decision and the Industrial separation within 12 to 18 months give dated tests.

## About

Textron is a US aerospace, defense and industrial company based in Providence, Rhode Island. Textron Aviation makes Cessna and Beechcraft business jets, turboprops and piston aircraft and sells parts and services. Bell makes military and commercial helicopters and tiltrotor aircraft, including the H-1 helicopters and the MV-75 Cheyenne, the US Army's new long-range assault aircraft. Textron Systems makes armored land vehicles, uncrewed systems and training services. The Industrial segment includes Kautex, which makes fuel systems for cars, and Textron Specialized Vehicles, which makes E-Z-GO golf carts and other vehicles. A small Finance segment lends to aircraft buyers. Revenues were $3.83 billion in Q2 2026. In April 2026, Textron said that it intends to separate its Industrial segment.

## Thesis

The market prices Textron for slow profit growth and for the risk on its large new military program. Segment profit at Textron Aviation and Bell fell in Q2 2026 because of manufacturing inefficiencies, lower jet deliveries and program mix. The MV-75 Cheyenne is Bell's most important future program, and its funding depends on US budget decisions: Textron's 2026 outlook assumes extra 2026 funding through an Above Threshold Reprogramming request, and without it adjusted EPS could be $0.20 to $0.30 lower and cash flow $150 million to $250 million lower. Investors also value Textron as a conglomerate with a low-margin Industrial segment. Results are on plan: in Q2 2026, revenues rose to $3.83 billion and adjusted EPS rose to $1.62 from $1.55, and Textron kept its 2026 guidance of adjusted EPS of $6.40 to $6.60. For the gap to close, three things must be true. The MV-75 must get its funding and move through development on schedule. Textron Aviation must turn its $8.0 billion backlog into more deliveries with better margins. Textron must complete the separation of the Industrial segment, by a sale or a spin-off, within 12 to 18 months of April 2026, as planned. The Q3 2026 report on October 29, 2026, is the next test. The 2027 guidance in January 2027 is the main test. If these checks pass, the gap can close over the next four to six quarters. The main reason it may not close is a delay or a cut in MV-75 funding.

## Checkpoints

- Oct 29, 2026: Q3 2026 earnings: MV-75 funding and deliveries. Status: Pending. Watch: Results on track for the $6.40 to $6.60 adjusted EPS guidance with the extra MV-75 funding received pass; a cut to the guidance or a funding delay fails.
- Jan 2027 (estimate): 2026 results, the 2027 guidance and the Industrial separation. Status: Pending. Watch: A 2027 outlook with higher earnings and a clear path to sell or spin off the Industrial segment passes; lower guidance or a stalled separation fails.

## Balance sheet

- Cash: $1.4B
- Debt: $3.5B
- Net debt: $2.0B
- Undrawn credit line: $1.0B, to October 2030
- Debt due within 12 months: $355M

At July 4, 2026, Textron's manufacturing group had cash and equivalents of $1.44 billion and debt of $3.47 billion, of which $355 million was due within 12 months. Net debt to capital was 20% and debt to capital was 30%, with shareholders' equity of $8.05 billion. Nothing was drawn on its $1.0 billion senior unsecured revolving credit facility, which expires in October 2030. The Finance group had cash of $170 million and debt of $339 million. Net cash from operating activities of the manufacturing group was $235 million in Q2 2026. Textron expects manufacturing cash flow before pension contributions of $700 million to $800 million in 2026.

As of 2026-07-04.

Sources:

- https://www.sec.gov/Archives/edgar/data/217346/000021734626000036/txt-20260704.htm
- https://www.sec.gov/Archives/edgar/data/217346/000021734626000034/q220268-kex991.htm

## Recent events

- 2026-09-29: Textron said that it will report Q3 2026 results on October 29, 2026.
- 2026-07-28: Textron reported Q2 2026 results. Revenues rose 3% to $3.83 billion. GAAP EPS was $1.42 and adjusted EPS was $1.62, up from $1.55. Textron Aviation delivered 40 jets and 44 turboprops and had a backlog of $8.0 billion. Bell revenues rose 6% to $1.1 billion with higher H-1 and MV-75 volume, and Bell's backlog was $7.5 billion. Textron kept its 2026 guidance and bought back $209 million of shares.
- 2026-04-30: Textron said that it intends to separate its Industrial segment, Kautex and Textron Specialized Vehicles, from its aerospace and defense businesses. It will look at a sale or a tax-free spin-off and targets completion within 12 to 18 months.
- 2026-04-30: Textron reported Q1 2026 results. GAAP EPS was $1.25 and adjusted EPS was $1.45, up from $1.28. Textron bought back $168 million of shares.

## Risks

- High: The MV-75 Cheyenne depends on US Army funding. Textron's 2026 outlook assumes extra funding. Without it, adjusted EPS could be $0.20 to $0.30 lower and cash flow $150 million to $250 million lower.
- Medium: Demand for business jets depends on the economy and on corporate profits. Lower orders, or more manufacturing inefficiencies, can lower Textron Aviation's deliveries and margins.
- Medium: The separation of the Industrial segment may take longer than planned, or bring a lower price than investors expect.
- Low: Tariffs and supply chain problems can raise costs for aircraft and industrial products.

## Links

- Page: https://picks.kamadorueda.com/company/TXT/
- History of changes: https://picks.kamadorueda.com/company/TXT/history/
- JSON with full history: https://picks.kamadorueda.com/data/company/TXT.json

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