One of the advantages of a conglomerate strategy is that cyclically strong businesses can offset cyclically weak businesses, leading to at least a little less volatility over the full cycle. The catch, though, is that sooner or later all of the businesses have to pull their own weight. That’s my main issue with Textron (NYSE:TXT) right now – while the bizjet business (Aviation) is performing well and set up for multiple years of good performance, the Bell helicopter business is in a transition period and the Industrial segment has been a chronic underachiever.
There are potential sources of upside, including the possibility of a significant military project win for Bell, but my main concerns are that the bizjet recovery is already priced in and that a meaningful turnaround in Industrial is a lower-probability event. I can see, maybe, upside into the low $80’s today, but that’s not enough to get me really interested in the stock.
Follow the link to the full article:
Textron's Bizjet Business Shouldering More And More Of The Growth Load
No comments:
Post a Comment