Yahoo Finance Is Textron (TXT) Stock Undervalued Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company value investors might notice is Textron (TXT). TXT is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 14.39 right now. For comparison, its industry sports an average P/E of 18.47. TXT's Forward P/E has been as high as 15.03 and as low as 11.81, with a median of 13.63, all within the past year.
TXT is also sporting a PEG ratio of 1.42. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. TXT's industry has an average PEG of 2.08 right now. Within the past year, TXT's PEG has been as high as 1.49 and as low as 1.06, with a median of 1.17.
We should also highlight that TXT has a P/B ratio of 2.56. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. TXT's current P/B looks attractive when compared to its industry's average P/B of 3.47. Over the past 12 months, TXT's P/B has been as high as 2.70 and as low as 1.78, with a median of 2.15.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. TXT has a P/S ratio of 1.31. This compares to its industry's average P/S of 1.69.
Finally, investors should note that TXT has a P/CF ratio of 13.97. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. TXT's P/CF compares to its industry's average P/CF of 20.90. TXT's P/CF has been as high as 14.56 and as low as 10.21, with a median of 11.72, all within the past year.
These are only a few of the key metrics included in Textron's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, TXT looks like an impressive value stock at the moment.
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Textron Inc. (TXT) : Free Stock Analysis Report
