Textron Inc. (TXT)
Aeroespacial y defensa / industrial diversificado
Textron combines business aviation (Cessna/Beechcraft), helicopters and Bell's MV-75 program, defense systems, an industrial business under a sale process, and a captive finance arm; it trades at an EV/EBIT of approximately 11.9 times, well below the 15-22 times band of the aerospace archetype, while sustained buybacks reduce shares outstanding 5% annually and the consolidated backlog of $18.8 billion sustains multi-year revenue visibility.
- Price
- $82.61
- Intrinsic value (5y, base)
- $204
- Total annual return (5y)
- 19.9%
- Status (nominal)
- Very undervalued
- Margin of safety
- +50%
The essentials
- Consolidated backlog of $18.8 billion at year-end 2025, with Bell's MV-75 program ramping toward full-rate production
- Structural buyback: diluted shares fell from 215 million (FY2022) to 175 million in the TTM, a pace close to 5% annually
- Trades at EV/EBIT ~11.9 times against a reference band of 15-22 times for the aerospace archetype
- The Industrial segment (Kautex and specialized vehicles) entered a sale process on 28-Jul-2026, with no terms or timeline defined yet
Intrinsic value — two valuation methods
Total return at 5 years: 19.9%/year = 19.8% appreciation + 0.1% dividend. The target price ($204) is ex-dividend; the $0 in dividends collected over 5 years are added separately.
By both methods, the value today (DCF $120 · Multiples $164) exceeds the market price ($83).
Pillars of the analysis
The verdict — today vs 5 years
Today — with margin of safety: at $83 trades ~49.6% below its value discounted to today (~$164) — the wide discount we require (≥38%, equivalent to a ~15% annual return); the risk is covered by the margin, not the rate.
At 5 years — Muy infravalorado: the target price ($204) plus dividends yield above the required average return (10%) — the business compounds.
The bridge: the return at 5 years comfortably exceeds the risk-free rate (4.5%) — and the discount reaches the required margin of safety.
Thesis
The business
Textron combines a reasonably good-quality aerospace and defense core (growing backlog, MV-75 as a medium-term engine) with a lower-margin industrial segment already under a sale process and a small captive finance arm. The moat is narrow but real: regulatory certification plus an installed aftermarket base that generates recurring revenue.
The valuation
It is valued by sum of the parts: Aerospace and Defense (EV/EBIT, band 15-22×), Industrial (EV/EBIT, band 12-18×) and Finance (treated as a lender, band 10-15×), weighted by their contribution to year-5 operating income. The base case yields a 5-year value of $204 per share, a CAGR of +20% versus the market price.
The margin of safety
At market price, the stock trades There is a margin of safety: the market's perception is meaningfully worse than reality.. The verdict is Very undervalued, with an estimated return of +20% annually over 5 years versus the 15% hurdle the method requires for a high-conviction investment.
What to watch
The key disconfirmer is financing for the MV-75 program: if additional 2026 funding via Above Threshold Reprogramming is not approved, adjusted earnings per share could fall $0.20-0.30 and cash flow $150-250 million. The second test is the outcome of the Industrial sale process: a poor multiple or a prolonged delay does not unlock the value the market appears to be discounting.
Educational / informational. Does not constitute investment advice.