DUAVF - Textron Cruising With A Healthy Backlog But Turbulence Seems All But Inevitable
2024-07-03 08:21:04 ET
Summary
- Textron is in a tricky place today, as the bizjet cycle is likely past its peak, the FLRAA win is some distance from full production, and macroeconomic headwinds pressure Industrial.
- The FLRAA contract win was crucial for Bell's viability, and there's significant upside from potential add-orders and/or foreign sales, but it's tough to model given long timelines and order uncertainty.
- Bizjet orders remain healthy, but more moderate expectations are advised as the segment faces a potential cyclical downturn and macro pressures.
- Long-term revenue growth around 6% and improving margins/FCF generation can support a fair value in the $90's, but I'd like more upside given the potential business risks and headwinds.
Once companies are in a good position with respect to backlog and future business prospects, Wall Street often turns to speculating as to how and when it will start to go wrong. While that may be a bit of an exaggeration where Textron ( TXT ) is concerned, bullishness over the future benefits of the Future Long Range Assault Aircraft (or FLRAA) contract win is definitely tempered by concerns that the business jet cycle is nearing its end....
Textron Cruising With A Healthy Backlog, But Turbulence Seems All But Inevitable