Shares of defense contractor Textron (TXT 0.26%) tumbled 11.8% through 10:35 a.m. ET Thursday despite the company reporting better-than-expected results for Q1 2024.

Analysts forecast the maker of armored cars, military drones, Cessna airplanes, and Bell helicopters would earn only $1.13 per share (non-GAAP) on sales of $3.1 billion in Q1. But Textron surprised to the upside with $1.20 per share in earnings and sales of $3.14 billion -- yet its stock fell. Why?

Textron Q1 earnings report

The earnings numbers above are all non-GAAP -- which is to say they don't count costs that the company considers "one-time" in nature. When calculated according to generally accepted accounting principles (GAAP), Textron's earnings were actually only $1.03 per share, which was less than the non-GAAP number, and may have disappointed investors. Still, it's a respectable 12% improvement over Q1 2023 numbers -- not too shabby considering sales grew less than 4%.

Textron grew sales and earnings in three of its four biggest segments (aviation, Bell helicopters, and "systems," the division that builds drones and armored cars). Only the company's industrial division suffered a sales and earnings decline.

These weren't the biggest changes at Textron, however. The biggest change was the fact that Textron's share count fell 6% year over year, as the company continued buying back stock. (This also helped drive earnings per share higher, as net profits were divvied up among fewer shares.)

Is Textron stock a buy?

Clearly, Textron thinks its stock is a buy. Just as clearly, investors today think it's a sell. So who's right?

Here's how we find out: At $15.9 billion in market capitalization and $13.8 billion in annual revenue, Textron stock sells for about 1.2 times trailing sales. That's a bit expensive for a defense contractor. The stock also sells for 17 times earnings, which seems aggressive for the 10% long-term growth Textron is expected to produce -- and free cash flow is unimpressive at only 72% of reported earnings.

Thus, I have to conclude: Textron stock is more of a sell than a buy today.