Aerospace and defense company Textron (NYSE: TXT) met Wall Street’s revenue expectations in Q3 2026, with revenue up 4.1% year on year to $3.75 billion. Its non-GAAP profit of $1.76 per share was 21.8% above analysts’ consensus estimates.

For more on Textron, read our free full research report.

Revenue growth

A company’s long-term performance is an indicator of its overall quality. Any business can deliver a good quarter or two, but the best consistently grow over the long haul. Textron’s revenue grew at a sluggish 4% compounded annual growth rate over the last five years, falling short of the industrials sector standard.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Textron’s annualized revenue growth of 5.1% over the last two years is above its five-year trend, a positive sign.

This quarter, Textron grew its revenue by 4.1% year on year, and its $3.75 billion of revenue was in line with Wall Street’s consensus estimates.

Looking ahead, sell-side analysts expect revenue to grow 4.6% over the next 12 months, according to S&P, similar to its two-year rate. This projection is underwhelming and implies its newer products and services will not catalyze better top-line performance yet.

Operating margin

Textron has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 8.3%, higher than the broader industrials sector.

Textron’s operating margin decreased by 1.2 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Textron generated an operating margin of 7.2%, down 2 percentage points year on year. This relatively small decline indicates the company’s overall cost structure has been relatively stable.

Earnings per share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Textron’s EPS grew at a 13.9% compounded annual growth rate over the last five years, higher than its 4% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t improve.

We can take a deeper look into Textron’s earnings quality to better understand the drivers of its performance. A five-year view shows that Textron has repurchased its stock, shrinking its share count by 23.8%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

As with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

Textron’s two-year annual EPS growth of 6.9% was lower than its five-year trend.

In Q3, Textron reported adjusted EPS of $1.76, up from $1.55 in the same quarter last year. This result easily cleared analysts’ consensus estimates, a positive outcome for shareholders. Over the next 12 months, Wall Street expects Textron’s full-year EPS to grow 7.9% from $6.56 to $7.08, according to S&P.

Key takeaways from Textron’s Q3 results

Textron’s EPS beat and full-year EPS guidance above Wall Street’s consensus were the key positives in a solid quarter. Revenue came in line with expectations. Shares surged 5.7% to $82.81 immediately after the results.

Textron reported solid earnings, but one quarter doesn’t necessarily make the stock a buy. An investment decision should consider the bigger picture of valuation and business quality as well as the latest earnings. For more on those factors, read the full research report here (it’s free).