I suppose investors could have been upset by defense contractor Textron's
Textron revealed that sales had risen 13% versus last year's Q1, and profits more than twice that -- up 30% for "continuing operations." (The company made some divestitures in its industrial operations segment.) Management also upped its earnings guidance and now expects to rake in about $1.40 per share in Q2, and close the year in the neighborhood of $6.20.
Business by business, things didn't work out ideally this quarter, but they were good enough. Cessna was the firm's most profitable business (with a 16% operating margin) and its second-fastest grower, with 11% sales growth. Flip the relationship between profits and growth, and the second-most profitable Textron unit, Bell Helicopter, which sports 10% operating margins, grew sales 20%. Finally, the least profitable business -- industrial operations, with 7% margins -- experienced the most anemic growth in sales, at just 6%.
Who could ask for anything more?
Shareholders. They're insatiable.
Fortunately for Textron's, the company looks well-placed to satisfy their desires. According to CEO Lewis Campbell, the "longer-term" outlook is "clearly positive." While backlog declined slightly at Bell Helicopter this quarter, Cessna more than made up for the shortfall. According to Campbell, backlog at Cessna rose $500 million over the course of the quarter. Moreover, this business continues to experience "favorable pricing" and a good "mix" in its Citation business jet sales.
Based on these comments, I think management had good reason to increase the earnings guidance. If Textron did this well in Q1, with its second-most-profitable unit serving as the engine of growth, just imagine how well it can do when its most profitable unit shoulders that load come Q2 earnings in July.
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Fool contributor Rich Smith does not own shares of any company named above.