Textron (TXT) was supposed to benefit from a pick up in defense spending. It was supposed to benefit from renewed infrastructure spending. Maybe it still will. But Textron is tanking today after missing earnings forecasts and announcing the acquisition of Arctic Cat (CAT).
Vertical Research Partners’ Robert Stallard and team offer their take:
This was a pretty big miss by Textron on both the quarter and the guidance. Although we had been more optimistic than consensus on Aviation revenues, the rest of our model appears to be pretty close to what others were projecting. We expect there to be some head scratching on what we got wrong, and as a consequence some wariness about getting too optimistic on projections for 2017 and beyond. The result and guidance is likely to overshadow the Arctic Cat acquisition, which looks like it fits in nicely with Textron’s Specialized Vehicle portfolio.
Shares of Textron have tumbled 9.5% to $44.68 at 10:13 a.m. today.