PROVIDENCE – Textron Inc. got a public show of support on Monday as Barron’s magazine published an interview with an investor who predicted the company is on track to boost earnings after dealing with last year’s liquidity crisis.
The praise came from Jerry Senser, CEO and chief investment officer at Institutional Capital, a Chicago-based fund that invests in value stocks. Senser, who is bullish on the U.S. economy’s prospects, told the magazine that Textron was his top pick among stocks at the moment.
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“Right now, we would categorize this stock as a good-management story and a problem fixing-situation,” he said, noting that the company had dealt with its liquidity crisis last year and was now shoring up its finance division.
Textron shares have more than quintupled in value since hitting a 52-week low of $3.57 a share on March 6. The stock was trading at $18.42, down 3.7 percent, at 1:34 p.m. Monday on the New York Stock Exchange.
Senser praised Scott Donnelly, the former General Electric executive who will become Textron’s CEO in December, saying “he has a very good track record, and we think he will be a fresh force for operational improvement at Textron.” He also expressed admiration for Frank Connor, the longtime Goldman Sachs Group Inc. executive who recently became Textron’s chief financial officer.
With the stock trading around $20 a share and earnings for next year forecast at around $1 a share, Senser said the price-earnings ratio for Textron was high, but he attributed that to “cyclically depressed” earnings.
“We believe that the company can earn closer to $2 going out several years, as soon as the turnaround that management is starting to put into place becomes better recognized and as their businesses slowly begin to improve,” he said.
Senser also said Textron has room to improve the operating margins by cutting costs at its various units, particularly Cessna, and that Cessna, Bell Helicopter or Textron’s defense divisions could all make attractive takeover targets.
Textron is scheduled to release its third-quarter earnings report on Tuesday afternoon.
Additional information is available at textron.com.
