Textron Inc. TXT is scheduled to report third-quarter 2022 results on Oct 27, before market open.
Textron has a four-quarter earnings surprise of 11.28%, on average. Solid commercial deliveries and favorable pricing are expected to have contributed to Textron’s revenues. However, unimpressive performance from Bell and Textron Systems might have hurt overall results.
Textron Aviation Remains a Key Catalyst
The steady air travel trend observant in recent times has been boosting the commercial aviation market, which in turn must have bolstered TXT’s aviation segment’s performance in the third quarter. Thus, one may expect the company to have witnessed strong deliveries for Citation jets and commercial turboprops in Q3. This, in turn, must have boosted the segment’s revenues. Also, higher aftermarket volume from increased aircraft utilization is expected to have added an impetus to this segment’s performance in the third quarter.
The Zacks Consensus Estimate for Textron Aviation segment’s revenues in the third quarter is pegged at $1,368 million, indicating an improvement of 15.8% from revenues reported in the year-ago quarter.
Textron Inc. Price and EPS Surprise
Textron Inc. price-eps-surprise | Textron Inc. Quote
Bell’s Performance May Continue to Be a Drag
The Bell segment is likely to have been negatively impacted by lower revenues from the military business, primarily related to lower H-1 production. Lower helicopter delivery due to COVID-induced supply chain headwinds might have boosted the growth of this segment. However, the commercial side of the segment is expected to reflect strong demand trends.
The Zacks Consensus Estimate for the Bell segment’s revenues in the third quarter is pegged at $703 million, indicating a decline of 8.6% from revenues reported in the year-ago quarter.
Lower Volumes From Textron Systems
The U.S. Army's withdrawal from Afghanistan on its fee-for-service as well as aircraft support contracts for Textron’s Air Systems might have resulted in lower volumes for the Textron Systems unit in the third quarter. This is expected to have negatively impacted its segment’s performance in the soon-to-be-reported quarter.
The Zacks Consensus Estimate for Textron System’s revenues in the third quarter is pegged at $300 million, indicating an increase of 0.3% from revenues reported in the year-ago quarter.
Bright Expectations for the Industrial Unit
We remain optimistic about the revenues from the Industrial unit, driven by higher pricing volume in specialized vehicles, mainly in personal transportation and golf product lines. The Zacks Consensus Estimate for Textron System’s third-quarter revenues is pegged at $791 million, indicating an improvement of 8.4% from the year-ago quarter.
Q3 Estimates
The addition of PIPISTREL, post its acquisition this April, must have also boosted Q3 revenue growth. Considering the mixed segmental performance expected for TXT, we remain optimistic about its overall top-line outcome. The Zacks Consensus Estimate for third-quarter revenues is pegged at $3.21 billion, suggesting a rise of 7.3% from the year-ago quarter.
Higher commercial deliveries as well as favorable pricing must have bolstered its bottom line in the soon-to-be-reported quarter. Also, favorable revenues must have boosted its year-over-year earnings performance.
The Zacks Consensus Estimate for third-quarter earnings is pegged at 94 cents per share, indicating an improvement of 10.6% from the prior-year reported figure.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for TXT this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that is not the case here.
Textron has an Earnings ESP of -3.90% and a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.
Stocks to Consider
Here are two defense companies you may want to consider as these have the right combination of elements to post an earnings beat this season:
Spirit AeroSystems SPR: It is scheduled to release its third-quarter results on Nov 3. SPR has an Earnings ESP of +47.19% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
SPR delivered a four-quarter average negative earnings surprise of 100.31%. The Zacks Consensus Estimate for Spirit AeroSystem’s third-quarter bottom line is pegged at a loss of 39 cents, which implies a solid improvement from a loss of $1.13 incurred in the third quarter of 2021.
Huntington Ingalls Industries HII: It is slated to release its third-quarter results on Nov 3. HII has an Earnings ESP of +0.35% and a Zacks Rank #2.
HII delivered a four-quarter average earnings surprise of 12.38%. The Zacks Consensus Estimate for Huntington’s third-quarter earnings, pegged at $3.53, suggests a decline of 3.3% from the third quarter of 2021.
An Upcoming Defense Earnings
Spire (SPIR) is slated to report its third-quarter results on Nov 9. It holds a Zacks Rank #2.
The Zacks Consensus Estimate for SPIR’s third-quarter earnings, pegged at a loss of 10 cents, has remained unchanged over the past seven days. SPIR boasts a long-term earnings growth rate of 7.9%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Textron Inc. (TXT): Free Stock Analysis Report
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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.
