Textron Shares Soared: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of diversified manufacturer Textron (NYSE: TXT  ) popped 14% on Wednesday after its quarterly results and outlook topped Wall Street estimates.

So what: Textron posted a $19 million fourth-quarter loss on several one-time charges, but better-than-expected adjusted EPS -- $0.49 versus the consensus of $0.34 -- coupled with a positive 2012 outlook suggests that management's turnaround plan is indeed taking hold. In fact, today's 14% rally represents the biggest surge Textron investors have seen in more than two years. 

Now what: Textron now sees 2012 adjusted EPS of $1.80 to $2, which is also well ahead of the average analyst estimate of $1.67. "In 2012, we see relatively flat revenues at Textron Systems, modest growth at Industrial, and double digit growth at both Cessna and Bell," Chairman and CEO Scott Donnelly said. "We expect Bell's commercial business to be particularly robust next year, as our investment in product development is driving strong order flow." With the stock still off about 15% from its 52-week highs and trading at a reasonable forward P/E, investors might even have some time to buy into that optimism.

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