TXT
Textron Inc.
$75.93
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Fair Value
Trading 20.3% below fair value
You pay
$75.93
Bear
$77.94
Fair
$95.26
Bull
$112.58
Bear
$77.94
+2.6%
$4.33 × 18x
Fair
$95.26
+25.5%
$4.33 × 22x
Bull
$112.58
+48.3%
$4.33 × 26x
Adjust Assumptions
22.0x
4.33$
Key Value Driver
Through-cycle normalized EPS ($4.33)
Implied Market Multiple
17.5x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (29 analysts)
$90.50
Divergence from AlphaVal
5%
Summary
Using 7-year normalized EPS of $4.33 at a 22x cycle multiple, the base-case value is $95.26 per share. P/TBV cross-check: 2.5x.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Price-to-book value of 2.5x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing