Textron Inc. (NYSE: TXT) experienced a decline in its stock price during Wednesday's trading session following the announcement of fiscal 2026 earnings guidance that fell short of market expectations. Although the company delivered a quarterly sales increase that beat analysts' forecasts alongside adjusted earnings per share (EPS) that slightly exceeded estimates, the lower-than-anticipated outlook for the upcoming fiscal year spurred investor caution.
In the latest quarter, Textron's revenue rose to $4.175 billion, up from $3.613 billion in the same period the previous year. This figure surpassed the consensus estimate of $4.098 billion by a comfortable margin. The adjusted EPS came in at $1.73, marginally above the street estimate of $1.70.
Regarding cash flow, the manufacturing group generated operating cash flow of $1.3 billion for the fiscal year 2025. The company reported cash and cash equivalents totaling $1.94 billion as of the start of January. It also maintained an active share repurchase program, buying back $187 million worth of shares in the fourth quarter alone, contributing to a total of $822 million repurchased throughout 2025.
Performance Across Segments
Textron Aviation delivered $1.7 billion in revenues, marking a notable 36% increase year-over-year. This growth was largely driven by a $400 million jump in aircraft sales and an additional $67 million from aftermarket parts and services. The aviation unit's backlog remained robust at $7.7 billion.
The Bell segment recorded revenues of $1.3 billion, up 11% year-over-year. This was attributed primarily to a $139 million rise in military revenues, with increased volume on the U.S. Army’s MV-75 program playing a significant role. Bell’s backlog stood at $7.8 billion.
Textron Systems saw revenues climb 4% year-over-year to $323 million, attributable to higher volume in its operations. Conversely, the Industrial segment faced a decline, with revenues dropping by $48 million to $821 million during the quarter.
Outlook for Fiscal 2026
Looking ahead to fiscal 2026, Textron forecasted adjusted EPS in the range of $6.40 to $6.60. This guidance fell short of the consensus estimate, which stood at $6.84. Revenue was projected to reach approximately $15.50 billion, up from $14.8 billion reported in fiscal 2025.
The company anticipates operating cash flow for the manufacturing group between $1.3 billion and $1.4 billion, with manufacturing cash flow before pension contributions estimated at $700 million to $800 million. Planned pension contributions remain modest at around $50 million.
The cautious outlook reflects higher investments planned at Bell to accelerate the MV-75 program. These expenditures are expected to impact near-term cash flow negatively.
Management Commentary
CEO Lisa M. Atherton emphasized the progress across key segments. "Aviation completed three certification programs while significantly growing revenue as it recovered from the strike in 2024," she noted. Atherton also highlighted Bell’s strong military revenue growth, stating the segment delivered a second consecutive year of 20% growth, driven by the accelerating MV-75 program.
She further remarked that Textron Systems secured important contracts positioning the business for future expansion. In contrast, the Industrial segment streamlined its portfolio, including divesting the Powersports business.
Atherton expressed optimism about the company's momentum despite the tempered earnings outlook, commenting, "As we move into 2026, our momentum remains strong supported by significant bookings, healthy demand across our markets, continued program execution, and ongoing operational improvements." She concluded by underscoring Textron's commitment to investing in product innovation and capabilities aimed at driving growth and long-term shareholder value.
Stock Market Reaction
Consequent to the earnings release and guidance update, Textron’s shares declined by approximately 3.96%, trading near $90.50 during premarket sessions on Wednesday, according to market data. This reaction reflects investor concerns over potential impacts of the lower EPS forecast and increased investment expenditures expected to weigh on cash flow.
Key Points
In the latest quarter, Textron's revenue rose to $4.175 billion, up from $3.613 billion in the same period the previous year. This figure surpassed the consensus estimate of $4.098 billion by a comfortable margin. The adjusted EPS came in at $1.73, marginally above the street estimate of $1.70.
Regarding cash flow, the manufacturing group generated operating cash flow of $1.3 billion for the fiscal year 2025. The company reported cash and cash equivalents totaling $1.94 billion as of the start of January. It also maintained an active share repurchase program, buying back $187 million worth of shares in the fourth quarter alone, contributing to a total of $822 million repurchased throughout 2025.
Performance Across Segments
Textron Aviation delivered $1.7 billion in revenues, marking a notable 36% increase year-over-year. This growth was largely driven by a $400 million jump in aircraft sales and an additional $67 million from aftermarket parts and services. The aviation unit's backlog remained robust at $7.7 billion.
The Bell segment recorded revenues of $1.3 billion, up 11% year-over-year. This was attributed primarily to a $139 million rise in military revenues, with increased volume on the U.S. Army’s MV-75 program playing a significant role. Bell’s backlog stood at $7.8 billion.
Textron Systems saw revenues climb 4% year-over-year to $323 million, attributable to higher volume in its operations. Conversely, the Industrial segment faced a decline, with revenues dropping by $48 million to $821 million during the quarter.
Outlook for Fiscal 2026
Looking ahead to fiscal 2026, Textron forecasted adjusted EPS in the range of $6.40 to $6.60. This guidance fell short of the consensus estimate, which stood at $6.84. Revenue was projected to reach approximately $15.50 billion, up from $14.8 billion reported in fiscal 2025.
The company anticipates operating cash flow for the manufacturing group between $1.3 billion and $1.4 billion, with manufacturing cash flow before pension contributions estimated at $700 million to $800 million. Planned pension contributions remain modest at around $50 million.
The cautious outlook reflects higher investments planned at Bell to accelerate the MV-75 program. These expenditures are expected to impact near-term cash flow negatively.
Management Commentary
CEO Lisa M. Atherton emphasized the progress across key segments. "Aviation completed three certification programs while significantly growing revenue as it recovered from the strike in 2024," she noted. Atherton also highlighted Bell’s strong military revenue growth, stating the segment delivered a second consecutive year of 20% growth, driven by the accelerating MV-75 program.
She further remarked that Textron Systems secured important contracts positioning the business for future expansion. In contrast, the Industrial segment streamlined its portfolio, including divesting the Powersports business.
Atherton expressed optimism about the company's momentum despite the tempered earnings outlook, commenting, "As we move into 2026, our momentum remains strong supported by significant bookings, healthy demand across our markets, continued program execution, and ongoing operational improvements." She concluded by underscoring Textron's commitment to investing in product innovation and capabilities aimed at driving growth and long-term shareholder value.
Stock Market Reaction
Consequent to the earnings release and guidance update, Textron’s shares declined by approximately 3.96%, trading near $90.50 during premarket sessions on Wednesday, according to market data. This reaction reflects investor concerns over potential impacts of the lower EPS forecast and increased investment expenditures expected to weigh on cash flow.
Key Points
- Textron surpassed quarterly revenue and adjusted EPS consensus, with sales increasing to $4.175 billion and EPS at $1.73.
- Significant segment growth was observed in Aviation and Bell, with robust backlogs indicating sustained demand.
- Fiscal 2026 EPS guidance between $6.40 and $6.60 fell below analysts' consensus at $6.84, prompting a negative stock reaction.
- Higher investment spending in Bell’s MV-75 program is a critical factor affecting near-term cash flow projections.
- The increased investment in the MV-75 program may constrain manufacturing group cash flow in the near term, potentially affecting liquidity.
- Industrial segment revenue decline and divestitures could weigh on overall business performance and diversification.
- Actual fiscal 2026 earnings and revenue might deviate from current guidance due to market demand fluctuations or operational challenges.