Textron Soars as Cessna Jets Evade Market Turbulenceby
Third-quarter aviation profit margin is the highest since 2008
Earnings beat estimates; lower end of forecast increased
Textron Inc. rose the most in two months after earnings and sales reassured investors that the maker of Bell helicopters and Cessna business jets is weathering turbulence in the aerospace market.
Profit for this year will be $2.40 to $2.50 a share, Textron said Tuesday, raising the low end of the forecast from $2.30.
Textron’s sales of aircraft from single-engine propeller planes to corporate jets have been largely unaffected by a stronger dollar and falling exports squeezing companies such as General Dynamics Corp. that build larger private aircraft.
The company’s aviation unit, which is weighted toward smaller aircraft and North American customers, posted a 9.2 percent margin, its best since 2008, Jason Gursky, an aerospace analyst with Citigroup Inc., said in a note. While Bell has been hurt by slumping oil-and-gas industry demand, its 13.1 percent margin topped estimates and grew from a year earlier, “reflecting strong performance,” he said.
“Robust Aviation & Bell margins in tough end-markets should be enough to support the recently underperforming stock in a sign that management is focusing on what it can control,” Gursky said.
Textron increased 4.4 percent to $40.51 at 1:58 p.m. in New York. The shares earlier touched $40.77 in their largest intraday gain since Aug. 25.
Third-quarter profit from continuing operations of 63 cents a share beat estimates by 2 cents, leading to the raised forecast.