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Shares of Textron (TXT) trade at 14.5 times earnings, compared with 22.6 for the median S&P 500 company. The stock lost 3.7% over a year in which the S&P 500 returned 15.0%. This makes the maker of Citation jets and Bell helicopters either a sound business on sale, or a fairly priced company with lagging jet factories. So is the profit behind that low multiple growing?
Textron’s Profit Grew Faster Than Revenue
So far, yes. Textron’s net income rose 14.8% from a year earlier over the four fiscal quarters ended July 4, 2026, while revenue grew 8.8%. The low multiple is based on rising earnings, not shrinking ones. Growth slowed in the latest quarter, however. Revenue for fiscal Q2 2026 rose 3.0% from a year earlier, and net income barely moved.
Customer demand remains very strong, management said on the fiscal Q2 2026 earnings call. NetJets took its first Ascend jets in that quarter. Textron also generates cash. Free cash flow over the last twelve months equals 5.6% of the company’s market value, and Textron spent $209 million buying back its own shares in fiscal Q2 2026.
Textron Earns Thinner Margins Than Two Years Ago
Textron recorded a 17.8% gross margin over the four fiscal quarters ended July 4, 2026. That figure marks a drop from 22.6% two years earlier, and it sits below the company’s 19.3% average across the last three twelve-month periods. An operating margin of 6.7% compares with 18.5% for the median S&P 500 company, leaving Textron with far less of each sale than the typical large business.
Textron is not yet getting more jets out of its factories. The company delivered 40 jets in fiscal Q2 2026, compared with 49 a year earlier, even as its turboprop and Bell helicopter deliveries rose. Manufacturing inefficiencies and lower aircraft volume cut profit in the aircraft business by 3% in the quarter, management said. Management said the big change at Cessna, Beechcraft and its suppliers was a wave of workforce turnover five or six years ago, adding that about half of the current workforce now has less than five years of experience.
How Is Textron Trying To Fix Its Factories?
Textron is adding capacity in landing gear, milling, and paint, and the company is expanding dual sourcing of parts, management said on the July call. Management’s goal is to start seeing better deliveries toward the middle to last part of 2027, though executives said they could not give exact dates. Textron is also pursuing a sale or a spin-off of its Industrial segment as a step toward becoming a pure-play aerospace and defense company.
