Shareholders Should Be Pleased With Textron Inc.'s (NYSE:TXT) Price
Shareholders Should Be Pleased With Textron Inc.'s (NYSE:TXT) Price
Textron Inc.'s (NYSE:TXT) price-to-earnings (or "P/E") ratio of 19.5x might make it look like a sell right now compared to the market in the United States, where around half of the companies have P/E ratios below 16x and even P/E's below 9x are quite common. However, the P/E might be high for a reason and it requires further investigation to determine if it's justified.
With its earnings growth in positive territory compared to the declining earnings of most other companies, Textron has been doing quite well of late. The P/E is probably high because investors think the company will continue to navigate the broader market headwinds better than most. If not, then existing shareholders might be a little nervous about the viability of the share price.
Want the full picture on analyst estimates for the company? Then our free report on Textron will help you uncover what's on the horizon.How Is Textron's Growth Trending?
In order to justify its P/E ratio, Textron would need to produce impressive growth in excess of the market.
If we review the last year of earnings growth, the company posted a worthy increase of 14%. The latest three year period has also seen an excellent 254% overall rise in EPS, aided somewhat by its short-term performance. So we can start by confirming that the company has done a great job of growing earnings over that time.
Looking ahead now, EPS is anticipated to climb by 16% each year during the coming three years according to the analysts following the company. With the market only predicted to deliver 10% per annum, the company is positioned for a stronger earnings result.
In light of this, it's understandable that Textron's P/E sits above the majority of other companies. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.
The Key Takeaway
Typically, we'd caution against reading too much into price-to-earnings ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.
As we suspected, our examination of Textron's analyst forecasts revealed that its superior earnings outlook is contributing to its high P/E. At this stage investors feel the potential for a deterioration in earnings isn't great enough to justify a lower P/E ratio. Unless these conditions change, they will continue to provide strong support to the share price.
The company's balance sheet is another key area for risk analysis. Our free balance sheet analysis for Textron with six simple checks will allow you to discover any risks that could be an issue.
It's important to make sure you look for a great company, not just the first idea you come across. So take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
德事隆公司's(紐約證券交易所代碼:TXT)市盈率(或 “市盈率”)爲19.5倍,與美國市場相比,目前可能看起來像賣出,美國約有一半公司的市盈率低於16倍,甚至市盈率低於9倍也很常見。但是,市盈率之高可能是有原因的,需要進一步調查以確定其是否合理。
與大多數其他公司的收益下降相比,德事隆的收益增長處於正值區間,最近表現良好。市盈率可能很高,因爲投資者認爲該公司將繼續比大多數人更好地應對更廣泛的市場阻力。如果不是,那麼現有股東可能會對股價的可行性有些緊張。
想全面了解分析師對公司的估計嗎?然後,我們關於德事隆的免費報告將幫助您發現即將發生的事情。德事隆的增長趨勢如何?
爲了證明其市盈率是合理的,德事隆需要在超過市場的情況下實現可觀的增長。
如果我們回顧一下去年的收益增長,該公司公佈了14%的可觀增長。在最近三年中,每股收益總體增長了254%,這在一定程度上得益於其短期表現。因此,我們可以首先確認該公司在這段時間內在增加收益方面做得很好。
根據關注該公司的分析師的說法,展望未來,預計未來三年每股收益將每年增長16%。由於預計市場年增長率僅爲10%,因此該公司有望實現更強勁的盈利業績。
有鑑於此,德事隆的市盈率高於其他大多數公司是可以理解的。顯然,股東們並不熱衷於轉移可能着眼於更繁榮未來的東西。
關鍵要點
通常,在做出投資決策時,我們會謹慎行事,不要過多地閱讀市盈率,儘管這可以充分揭示其他市場參與者對公司的看法。
正如我們所懷疑的那樣,我們對德事隆分析師預測的審查顯示,其優異的盈利前景是其高市盈率的原因。在現階段,投資者認爲,收益惡化的可能性不足以證明降低市盈率是合理的。除非這些條件發生變化,否則它們將繼續爲股價提供強有力的支撐。
該公司的資產負債表是風險分析的另一個關鍵領域。我們對德事隆的免費資產負債表分析包括六張簡單的支票,將使您發現任何可能存在問題的風險。
重要的是要確保你尋找一家優秀的公司,而不僅僅是你遇到的第一個想法。因此,來看看這份免費名單,列出了最近收益增長強勁(市盈率低)的有趣公司。
對這篇文章有反饋嗎?對內容感到擔憂?直接聯繫我們。 或者,給編輯團隊 (at) simplywallst.com 發送電子郵件。
Simply Wall St的這篇文章本質上是籠統的。我們僅使用公正的方法根據歷史數據和分析師的預測提供評論,我們的文章無意作爲財務建議。它不構成買入或賣出任何股票的建議,也沒有考慮到您的目標或財務狀況。我們的目標是爲您提供由基本數據驅動的長期重點分析。請注意,我們的分析可能不考慮最新的價格敏感型公司公告或定性材料。簡而言之,華爾街沒有持有任何上述股票的頭寸。
譯文內容由第三人軟體翻譯。
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