Is Textron Inc. (TXT) overvalued or undervalued?
Updated Nov 10, 2026 · hand-researched model · educational, not advice
At a recent price of $85.41, Textron Inc. (TXT) sits inside a range too wide to call either way: our valuation lenses put the business somewhere between $59.23 and $168.59 per share. They disagree too widely for us to state a single fair value. We publish the range rather than a midpoint because a number that precise would claim more than the methods can support. This is an educational model, not a price target or a recommendation.
The valuation discounts Textron Inc.'s projected free cash flows at a weighted-average cost of capital (WACC) of 8.8%, with a long-run terminal growth rate of 2.5%. About 77% of the enterprise value comes from the terminal value — the portion beyond the explicit forecast window — which is typical for a stable, cash-generative business and a reminder that small changes in the discount rate or terminal growth assumption swing the intrinsic value meaningfully.
Running the DCF in reverse — solving for the growth the current price already assumes — the market is implying roughly 5.6% annual revenue growth for TXT. Our base case instead compounds to about 4.3% a year over the same forecast, so the market's implied growth is broadly in line with our base case. The reverse-DCF is a quick sanity check: it reframes 'is this stock cheap?' as 'do I believe the growth the price requires?' rather than arguing over a single point estimate of fair value.
Sensitivity matters more than any single number. Across a reasonable band of discount-rate assumptions, TXT's modeled DCF value ranges from about $47.40 to $117.41 per share. If that range still sits below today's price, the market is optimistic relative to the model across the whole band; if it brackets the price, the stock is roughly fairly valued on our assumptions. Use the interactive slider to see exactly where your own cost-of-capital view lands.
How to read this page: the DCF fair value is what Textron Inc. would be worth if its cash flows grow as modeled and are discounted at the stated WACC. The assumptions table shows every input and its source; the reverse-DCF shows what the market believes; the sensitivity band shows how fragile the answer is. None of this is investment advice — it is a transparent, auditable framework for forming your own view of TXT's intrinsic value. Figures update as new filings and prices come in.
The assumptions behind TXT's DCF
| Input | Value | Source |
|---|---|---|
| Base-year revenue | $14,724,000,000 | Textron FY2025 10-K (fiscal year ended 2026-01-03, accession 0000217346-26-000006, filed 2026-02-11): MANUFACTURING GROUP revenue only: Textron Aviation $5,955M + Bell $4,282M + Textron Systems $1,247M + Industrial $3,213M + eAviation $27M = $14,724M. Excludes the Finance segment's $75M (total revenue $14,799M), because the captive finance arm is valued separately in the net-debt bridge (see market.net_debt). +7.9% on FY2024's $13,652M, flattered by (a) recovery from the Sept-Nov 2024 Textron Aviation strike and (b) a 53-WEEK fiscal year — FY2025 ended 2026-01-03, so it carries one extra week, which sits in Q4. FY2026 is a normal 52-week year, so reported Year-1 growth understates underlying growth by roughly 2 points. CROSS-CHECK: H1 2026 manufacturing revenue $7,492M, +7.2% on H1 2025's $6,991M (same 26 weeks). |
| Base EBIT margin | 6.3% | Textron FY2025 10-K (fiscal year ended 2026-01-03, accession 0000217346-26-000006, filed 2026-02-11): DERIVED, Textron reports no operating-income line. Manufacturing segment profit $1,314M - corporate expenses and other $149M - LIFO inventory provision $199M - intangible amortization $32M - special charges $4M = $930M / $14,724M = 6.32%. EXCLUDED, deliberately: the $266M of non-service pension and postretirement INCOME (expected return on an overfunded plan; non-operating, and the surplus that earns it is carried at zero — see caveats), the $108M of manufacturing interest (in the debt bridge) and the Finance segment's $49M profit (in the bridge). Ties to the filing: $930M + $49M - $108M + $266M = $1,137M pretax income from continuing operations, exactly as reported. KEPT as real costs although Textron's 'segment profit' and 'adjusted EPS' exclude them: LIFO provision (1.35% of revenue; see nwc_pct_revenue for why this is not a double count), intangible amortization and SBC. CROSS-CHECK, H1 2026: $651M - $89M - $80M - $15M - $0 = $467M / $7,492M = 6.23%, vs 6.32% for H1 2025 on the same build. |
| Forecast revenue growth | 5% → 4% → 4% → 4% → 4% | Assumption — TickerWorth's 5-year explicit forecast |
| Risk-free rate | 5.2% | US 10Y Treasury constant maturity (FRED DGS10): 5.24% on 2026-10-01, the latest published observation; the program-wide rate shared by every researched model. |
| Beta | 0.91 | Yahoo Finance / yfinance published beta (5Y monthly): Published 5Y-monthly beta 0.908, used as-is. No normalization: Textron's mix (business jets, military rotorcraft, auto fuel systems) has not changed in a way the 5-year window misses, and the pending Industrial separation would, if anything, remove the most auto-cyclical piece. Each 0.1 of beta is worth roughly $4.80/share. |
| Terminal growth | 2.5% | Assumption — house default: House default 2.5% (roughly long-run nominal GDP), kept for comparability. Reasonable for a defense-and-aviation franchise with multi-decade platforms (MV-75 is a 2030s-2050s program), but Textron's own record is slow: manufacturing revenue was ~$13.6B in FY2019 and $14.7B in FY2025. 2.0% would take ~$4.70/share off. Must stay below the 8.81% WACC. |
| Diluted shares | 175M | Textron Q2 2026 earnings release, 8-K Ex-99.1 (accession 0000217346-26-000034, filed 2026-07-28): Q2 2026 weighted-average diluted shares 175,006,000 (H1: 175,591,000; FY2025: 180,258,000). Falling ~3% a year: Textron bought back $822M in FY2025 and $377M in H1 2026. Shares outstanding were 171.94M at 2026-07-04; the diluted weighted count is used to carry SBC dilution. Q3 buybacks are not rolled forward. |
| Market price | $85.41 | Delayed quote · as of 2026-11-10 05:03 UTC |
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