Textron Corporation
Summary This study covers the analyses of the TEXTRON CORPORATION— BENCHMARKING PERFORMANCE Textron's Board of Directors (Thundersbird School of Global Management, Graeme Rankine- TB0043, September 9,2009) had launched a new initiative to assess the company's supply chain and the company's working capital needs. First step was to benchmark the company's recent financial performance against other aerospace and defense firms to determine the areas in which the company's performance could be improved. Top management was particularly interested in understanding the company's sizeable investments in net working capital. Ms. Amphlett, a financial analyst in the Textron Corporation, soon found that Textron's recent stock price performance was impressive—with an overall increase from $22 per share in 2001 to more than $55 per share in April 2007, much better than the performance of the S&P 500 stock index over the same period. Cowan, a financial research firm, estimated EPS in 2007 and 2008 of $6.25 and $7.30 per share (versus $5.43 in 2006), respectively, and that the company's shares were worth $55-$57.50 per share, using a sum-of-the parts valuation methodology. Prudential set a target price of $51.50 per share, up from $50.50 using a discounted cash flow valuation approach.
Objectives
To make a performance analysis between the Textron and competitors within the same industry segment (mostly Aerospace and Defense firms) by using financial ratios for the fiscal 2005 and 2006 and to compare with Textron’s.
Problem short description Ms. Amphlett was surprised to learn that Textron's growth in revenue, net income, and cash flows over the last 10 years were much less spectacular. Ms. Amphlett obtained a copy of Textron's recent financial statements and information about Textron's competitors in the aerospace and defense industry. For comparison purposes, she also computed financial ratios for Textron and its competitors. But Ms. Amphlett also recalled from
Objectives
To make a performance analysis between the Textron and competitors within the same industry segment (mostly Aerospace and Defense firms) by using financial ratios for the fiscal 2005 and 2006 and to compare with Textron’s.
Problem short description Ms. Amphlett was surprised to learn that Textron's growth in revenue, net income, and cash flows over the last 10 years were much less spectacular. Ms. Amphlett obtained a copy of Textron's recent financial statements and information about Textron's competitors in the aerospace and defense industry. For comparison purposes, she also computed financial ratios for Textron and its competitors. But Ms. Amphlett also recalled from