May 14, 2012 - Textron Inc. (TXT-NYSE) operates in the aircraft, defense, industrial, and finance businesses worldwide. Its Cessna segment manufactures business jets, single engine utility turboprops, single engine piston aircraft, lift solutions, and parts, as well as maintenance, inspection, and repair services.

The company's Industrial segment offers blow-molded plastic fuel systems, windshield and headlamp washer systems, engine camshafts, catalytic reduction systems, other parts, plastic bottles, and containers; powered equipment, electrical test and measurement instruments, hand and hydraulic powered tools, and electrical and fiber optic assemblies primarily used in the electrical construction and maintenance, plumbing, wiring, telecommunications, and data communications industries; and golf carts, professional turf-maintenance equipment, as well as off-road, multipurpose utility, and specialized turf-care vehicles sold to golf courses, resort communities, municipalities, sporting venues, and commercial and industrial users.

Its Finance segment provides finance for purchase of aircraft, helicopters, and golf and turf-care equipment, as well as pre-owned aircraft and helicopters.

The company sells through a network of sales representatives, distributors, and authorized independent sales representatives, as well as directly to end users, home improvement retailers, and original equipment manufacturers. Textron Inc. was founded in 1923 and is headquartered in Providence, the Rhode Island.

This $25 stock traded as low as $3.60 at the beginning of 2009, when the world seemed to be ending. Of course earnings in 2008 were $3.17 a share. In 2009, they were 61 cents. But the stock rallied back, reaching $29.20 earlier this year. So did earnings, more than doubling '09 results in 2011 at $1.33. TXT seems to be back on course and heading for the old high set in 2007 of $74.40 a share (prices reflect 2 for 1 split in '07). Can it reach or go beyond that pinnacle?

There's good reason for the optimism in earnings growth. Take a look at 2011. At $1.31, they were up by 42% over 2010. Fourth quarter alone brought in 49 cents a share, 50% ahead of the fourth in 2010. The stock jumped by 15% on the news. Two outstanding divisions contributing to better results were Cessna and Bell. They made up over 50% to 2011 revenues, boosting earnings notably. Analysts think Cessna, the aircraft maker, will see better than 10% sales increases in 2012. Bell, the helicopter manufacturer, should also see a strong order flow through the year.

Management stated efficiencies are improving and so are margins. It also paid off $1.6 billion in debt to lower interest costs which is now at $4.3 billion, the lowest level in 4 years. The company carries a B+ for Financial Strength. Debt is 148.23% of equity or 60% of capital.

- Essential Numbers:
- Market Cap: $6.77 billion
- Forward P/E: 10.46
- Price to book: 2.33
- Operating margin: 5.57%
- Profit margin: 2.84%
- Return on assets: 2.86%
- Total cash: $628 million
- Cash per share: $2.24
- Current ratio: 2.43
- Book value: $10.41
- Beta: 2.10
- 52-week change: - 1.54%
- Total shares outstanding: 280.28 million
- Float: 279.63 million
- Held by insiders: .13%
- Held by institutions: 80.30%
- Dividend: 8 cents

Textron had one bad year (2009) and paid for it as the stock cratered. It's rebuilding a solid, diverse company that's been delivering earnings consistently. Debt is a little high, but management is paring it. If global economies continue to gain traction, TXT should continue it upward path.

- Company Web site: www.textron.com

  - Ted Allrich