Advertisement
UK markets close in 2 hours 46 minutes
  • FTSE 100

    7,957.89
    +25.91 (+0.33%)
     
  • FTSE 250

    19,865.77
    +55.11 (+0.28%)
     
  • AIM

    743.21
    +1.10 (+0.15%)
     
  • GBP/EUR

    1.1695
    +0.0026 (+0.23%)
     
  • GBP/USD

    1.2639
    +0.0001 (+0.01%)
     
  • Bitcoin GBP

    56,114.16
    +392.79 (+0.70%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,250.89
    +2.40 (+0.05%)
     
  • DOW

    39,788.78
    +28.70 (+0.07%)
     
  • CRUDE OIL

    82.53
    +1.18 (+1.45%)
     
  • GOLD FUTURES

    2,228.20
    +15.50 (+0.70%)
     
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     
  • HANG SENG

    16,541.42
    +148.58 (+0.91%)
     
  • DAX

    18,483.16
    +6.07 (+0.03%)
     
  • CAC 40

    8,219.34
    +14.53 (+0.18%)
     

Introducing Textron (NYSE:TXT), A Stock That Climbed 50% In The Last Five Years

When you buy and hold a stock for the long term, you definitely want it to provide a positive return. Better yet, you'd like to see the share price move up more than the market average. But Textron Inc. (NYSE:TXT) has fallen short of that second goal, with a share price rise of 50% over five years, which is below the market return. Looking at the last year alone, the stock is up 5.5%.

See our latest analysis for Textron

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Textron's earnings per share are down 12% per year, despite strong share price performance over five years.

ADVERTISEMENT

Essentially, it doesn't seem likely that investors are focused on EPS. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

The modest 0.2% dividend yield is unlikely to be propping up the share price. It is not great to see that revenue has dropped by 2.0% per year over five years. It certainly surprises us that the share price is up, but perhaps a closer examination of the data will yield answers.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth
earnings-and-revenue-growth

Textron is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. You can see what analysts are predicting for Textron in this interactive graph of future profit estimates.

A Different Perspective

Textron shareholders gained a total return of 5.7% during the year. But that return falls short of the market. If we look back over five years, the returns are even better, coming in at 9% per year for five years. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that Textron is showing 3 warning signs in our investment analysis , and 1 of those is a bit unpleasant...

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.