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Are Investors Undervaluing Textron (TXT) Right Now?
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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One stock to keep an eye on is Textron (TXT - Free Report) . TXT is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 13.42, while its industry has an average P/E of 22.22. TXT's Forward P/E has been as high as 17.68 and as low as 11.81, with a median of 13.72, all within the past year.
We also note that TXT holds a PEG ratio of 1.14. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. TXT's PEG compares to its industry's average PEG of 1.83. Within the past year, TXT's PEG has been as high as 1.40 and as low as 0.98, with a median of 1.16.
Another valuation metric that we should highlight is TXT's P/B ratio of 2.13. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 3. TXT's P/B has been as high as 2.27 and as low as 1.78, with a median of 2.11, over the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. TXT has a P/S ratio of 1.13. This compares to its industry's average P/S of 1.37.
Finally, our model also underscores that TXT has a P/CF ratio of 11.38. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 23.98. Over the past 52 weeks, TXT's P/CF has been as high as 12.70 and as low as 10.21, with a median of 11.65.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Textron is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, TXT feels like a great value stock at the moment.
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Are Investors Undervaluing Textron (TXT) Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One stock to keep an eye on is Textron (TXT - Free Report) . TXT is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 13.42, while its industry has an average P/E of 22.22. TXT's Forward P/E has been as high as 17.68 and as low as 11.81, with a median of 13.72, all within the past year.
We also note that TXT holds a PEG ratio of 1.14. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. TXT's PEG compares to its industry's average PEG of 1.83. Within the past year, TXT's PEG has been as high as 1.40 and as low as 0.98, with a median of 1.16.
Another valuation metric that we should highlight is TXT's P/B ratio of 2.13. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 3. TXT's P/B has been as high as 2.27 and as low as 1.78, with a median of 2.11, over the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. TXT has a P/S ratio of 1.13. This compares to its industry's average P/S of 1.37.
Finally, our model also underscores that TXT has a P/CF ratio of 11.38. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 23.98. Over the past 52 weeks, TXT's P/CF has been as high as 12.70 and as low as 10.21, with a median of 11.65.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Textron is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, TXT feels like a great value stock at the moment.