We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will Textron's (TXT) Q3 Earnings Reflect Divestiture Gains?
Read MoreHide Full Article
Textron Inc. (TXT - Free Report) is scheduled to report third-quarter 2018 results, before the market opens on Oct 18.
Possible sales growth at the Industrial and Bell segments, which together account for more than 50% of Textron’s top line, is expected to drive third-quarter revenues. Also, gains from divestiture to should boost earnings.
Let’s discuss these factors in detail.
The Industrial Segment — A Solid Contributor
Textron’s Industrial segment designs and manufactures automotive engine components, specialized vehicles as well as varied industry-related tools and equipment. Innovation of specialized vehicles, particularly following the integration of the Arctic Cat, continues to boost the segment’s performance.
In line with this, Textron introduced new model of its E-Z-GO Express personal transport vehicles, havoc and wildcat xx models of vehicles as well as the fleet management shield plus technology in the third quarter.
These developments should keep this segment’s top line growing in the yet-to-be reported quarter, keeping up with its usual trend.
The Bell segment has been generating improved results in past couple of quarters compared to weak performance delivered last year. In the second quarter, lower military revenues at this unit marred growth of higher commercial volume. However, in the third quarter, this unit bagged a few notable orders like the $510 million modification contract for delivering 29 units of AH-1Z new aircraft to U.S. Marine Corps. This, in turn, have made us optimistic about the Bell segment’s top-line growth in the third quarter.
The Zacks Consensus Estimate for the segment’s third-quarter sales is pegged at $811 million, reflecting a 6% improvement from the prior-year quarter’s $765 million.
Other Factors at Play
Within its Textron Systems business segment, the company has been witnessing lower volumes that are weighing on this unit’s sales due to the discontinuance of the sensor-fuzed weapon product line, for past couple of quarters. While management expects this unit to gain from the U.S. administration’s increased focus on unmanned aircraft systems, any near-term sales rebound remains unlikely.
In line with this, the Zacks Consensus Estimate for Textron’s third-quarter total sales is pegged at $398 million, mirroring a year-over-year decline of 27%.
Meanwhile, a one-time gain of approximately $400 million from the tools and test divestiture by Textron is expected in the third quarter. This should boost the company’s earnings growth. The Zacks Consensus Estimate for Textron’s third-quarter earnings is pegged at 76 cents, reflecting a year-over-year improvement of 16.9%.
What Does the Zacks Model Predict?
Our proven model shows that Textron is likely to beat earnings in third quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. This is the case here as you will see below.
Earnings ESP: Textron has an Earnings ESP of +0.24%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Key Picks
Here are some other defense companies that you may want to consider as our model shows that these also have the right combination of elements to post an earnings beat this quarter:
L3 Technologies is expected to report third-quarter 2018 results on Oct 25. The company has an Earnings ESP of +0.35% and a Zacks Rank of 2.
FLIR Systems is expected to report third-quarter 2018 results on Oct 30. The company has an Earnings ESP of +2.66% and a Zacks Rank #2.
General Dynamics (GD - Free Report) is expected to report third-quarter 2018 results on Oct 24. The company has an Earnings ESP of +0.09% and a Zacks Rank of 3.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Will Textron's (TXT) Q3 Earnings Reflect Divestiture Gains?
Textron Inc. (TXT - Free Report) is scheduled to report third-quarter 2018 results, before the market opens on Oct 18.
Possible sales growth at the Industrial and Bell segments, which together account for more than 50% of Textron’s top line, is expected to drive third-quarter revenues. Also, gains from divestiture to should boost earnings.
Let’s discuss these factors in detail.
The Industrial Segment — A Solid Contributor
Textron’s Industrial segment designs and manufactures automotive engine components, specialized vehicles as well as varied industry-related tools and equipment. Innovation of specialized vehicles, particularly following the integration of the Arctic Cat, continues to boost the segment’s performance.
In line with this, Textron introduced new model of its E-Z-GO Express personal transport vehicles, havoc and wildcat xx models of vehicles as well as the fleet management shield plus technology in the third quarter.
These developments should keep this segment’s top line growing in the yet-to-be reported quarter, keeping up with its usual trend.
Textron Inc. Price and EPS Surprise
Textron Inc. Price and EPS Surprise | Textron Inc. Quote
Bell Segment: Another Positive
The Bell segment has been generating improved results in past couple of quarters compared to weak performance delivered last year. In the second quarter, lower military revenues at this unit marred growth of higher commercial volume. However, in the third quarter, this unit bagged a few notable orders like the $510 million modification contract for delivering 29 units of AH-1Z new aircraft to U.S. Marine Corps. This, in turn, have made us optimistic about the Bell segment’s top-line growth in the third quarter.
The Zacks Consensus Estimate for the segment’s third-quarter sales is pegged at $811 million, reflecting a 6% improvement from the prior-year quarter’s $765 million.
Other Factors at Play
Within its Textron Systems business segment, the company has been witnessing lower volumes that are weighing on this unit’s sales due to the discontinuance of the sensor-fuzed weapon product line, for past couple of quarters. While management expects this unit to gain from the U.S. administration’s increased focus on unmanned aircraft systems, any near-term sales rebound remains unlikely.
In line with this, the Zacks Consensus Estimate for Textron’s third-quarter total sales is pegged at $398 million, mirroring a year-over-year decline of 27%.
Meanwhile, a one-time gain of approximately $400 million from the tools and test divestiture by Textron is expected in the third quarter. This should boost the company’s earnings growth. The Zacks Consensus Estimate for Textron’s third-quarter earnings is pegged at 76 cents, reflecting a year-over-year improvement of 16.9%.
What Does the Zacks Model Predict?
Our proven model shows that Textron is likely to beat earnings in third quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. This is the case here as you will see below.
Earnings ESP: Textron has an Earnings ESP of +0.24%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Textron currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Key Picks
Here are some other defense companies that you may want to consider as our model shows that these also have the right combination of elements to post an earnings beat this quarter:
L3 Technologies is expected to report third-quarter 2018 results on Oct 25. The company has an Earnings ESP of +0.35% and a Zacks Rank of 2.
FLIR Systems is expected to report third-quarter 2018 results on Oct 30. The company has an Earnings ESP of +2.66% and a Zacks Rank #2.
General Dynamics (GD - Free Report) is expected to report third-quarter 2018 results on Oct 24. The company has an Earnings ESP of +0.09% and a Zacks Rank of 3.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>