Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Textron Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 4.6% to 2.8% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 24, DPO 33, DIO 128). At a 7.9% WACC with mid-year discounting, the terminal value (85% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 13.6x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $75.28 per share, suggesting TXT is overvalued by 16.0% at the current price of $89.58.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 757 | 759 | 791 | 819 | 842 | 863 |
| (−) Net Interest | 121 | 121 | 126 | 131 | 135 | 138 |
| (+) D&A | 376 | 399 | 410 | 420 | 433 | 444 |
| EBITDA | 1,253 | 1,279 | 1,327 | 1,370 | 1,410 | 1,445 |
| (−) Tax | 115 | 115 | 120 | 125 | 128 | — |
| (−) CapEx | 431 | 433 | 451 | 467 | 480 | — |
| (−) ΔWC | 375 | 11 | 182 | 161 | 131 | — |
| Free Cash Flow (FCF) | 332 | 719 | 574 | 617 | 670 | — |
| Peers' EBITDA Multiple | 13.6x | |||||
| Terminal Value | 19,670 | |||||
| WACC / Discount Rate | 7.92% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 319 | 641 | 474 | 473 | 476 | 13,439 |
| Enterprise Value | 15,822 | |||||
| Projection Period | 2,383 | 15.1% | ||||
| Terminal Value | 13,439 | 84.9% | ||||
| (−) Current Net Debt | 2,257 | |||||
| Equity Value | 13,565 | |||||
| (÷) Outstanding Shares | 180M | |||||
| Fair Price | $75 | -16.0% | ||||
| WACC \ EV/EBITDA Exit Multiple | 9.6x | 11.6x | 13.6x | 15.6x | 17.6x |
|---|---|---|---|---|---|
| 5.9% | $59 | $71 | $83 | $95 | $107 |
| 6.9% | $56 | $68 | $79 | $91 | $102 |
| 7.9% | $53 | $64 | $75 | $86 | $97 |
| 8.9% | $51 | $61 | $72 | $82 | $93 |
| 9.9% | $48 | $58 | $68 | $78 | $88 |
Current price: $89.58. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.