Textron's (TXT) Unit Secures Order for Cessna Grand Caravans

Textron Inc.’s TXT business unit, Textron Aviation, recently secured an award for the delivery of two Cessna Grand Caravan EX turboprop aircraft. The award has been offered by the U.S. Army Contracting Command, Redstone Arsenal, AL.

The aircraft will be owned and operated by the Djiboutian Air Force.

What’s Favoring Textron?

Nations are reinforcing their military capabilities to strengthen their defense structure in a growing threat environment and aircraft operators are planning network expansions. In this context, turboprop aircraft play a critical role and have witnessed a significant rise in demand.

To this end, it is imperative to mention that Textron Aviation’s Cessna Grand Caravan EX aircraft is a multi-utility vehicle, operated by regional airlines, charter operators and cargo carriers worldwide. With an impressive output of 867 horsepower and a rate of climb of 1,275 feet per minute, the aircraft is engineered for challenging special missions, high payloads and short, rough runways while delivering single-engine economy and simplicity.

Undoubtedly, the latest award reflects the solid demand that Textron’s turboprop aircraft enjoy globally. Such wins, in turn, should boost Textron’s revenue growth in the coming years.

TXT’s Prospects in Turboprop Aircraft Market

With the introduction of new regional routes, turboprop aircraft’s demand is growing as they are ideal for covering short distances while being economical and environment-friendly. In the military sector, the demand for turboprop aircraft is recently on the rise, backed by the global increase in military spending and the need for fleet modernization. Per a report from the Mordor Intelligence firm, the turboprop aircraft market size is estimated to witness a CAGR of 1.88% during 2024-2029.

This offers strong growth opportunities for Textron, with the company’s Textron Aviation unit offering a robust portfolio for turboprop jets like the Cessna Grand Caravan EX, Caravan, SkyCourier and Beechcraft King Air 360, King Air 260 and King Air 360R. Its Beechcraft Denali, a high-performance single engine turboprop aircraft, is under development

During 2023, Textron Aviation delivered 153 commercial turboprops. Regarding recent achievements in this field, in 2024, SkyCourier was selected by Australia’s regional airline Hinterland Aviation. Further, at the Singapore Airshow, Textron won orders for one SkyCourier passenger variant and four Grand Caravan EXs. These, along with the latest contract win, should boost TXT’s revenues.

Opportunities for Peers

Apart from TXT, other companies expected to benefit from the growing turboprop aircraft market are Lockheed Martin LMT, Northrop Grumman NOC and Airbus Group EADSY.

Lockheed Martin’s C-130J Super Hercules is a four-engine turboprop military transport aircraft. With more than 2 million flight hours, it supports various missions like tactical airlift, search and rescues, special operations, commercial and refuelling. It is used by 26 operators in 22 nations around the world.

LMT’s long-term (three to five years) earnings growth is pegged at 4.2%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 2.4% from that reported in 2023.

Northrop Grumman’s E-2 Hawkeye is an all-weather, carrier capable tactical airborne early warning twin-turboprop aircraft. It has been serving the U.S. Navy fleet for more than 30 years. The E-2D Advanced Hawkeye delivers battle management, theatre air and missile defense, and multiple sensor fusion capabilities in an airborne system.

NOC has a long-term earnings growth rate of 10.1%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 4.6% from the 2023 reported figure.

Airbus’ C295 aircraft, with a maximum cruise speed of 260 kts and up to an altitude of 30,000 ft., is a highly versatile tactical transport tailored for multiple missions. It ranges from military operations like carrying troops, maritime patrol, airborne warning, surveillance, to humanitarian and other non-military operations like disaster relief flights, search and rescue etc. The C295 had reached a total of 300 orders as of Mar 12, 2024.

EADSY has a long-term earnings growth rate of 12.4%. The consensus estimate for 2024 sales indicates an improvement of 9.5% from the 2023 reported figure.

Price Performance

In the past year, shares of TXT have rallied 36.7% against the industry’s 1.3% decline.

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Zacks Rank

Textron currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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