It hasn't been a great afternoon session for Textron investors, who have watched their shares sink by -2.68% to a price of $67.41. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
Textron Inc. is an American industrial conglomerate based in Providence, Rhode Island. The company belongs to the Industrials sector, which has an average price to earnings (P/E) ratio of 20.49 and an average price to book (P/B) ratio of 3.78. In contrast, Textron has a trailing 12 month P/E ratio of 17.24 and a P/B ratio of 2.224.
When we divideTextron's P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.962, which indicates that the market is undervaluing the company's projected growth (a PEG ratio of 1 indicates a fairly valued company). Your analysis of the stock shouldn't end here. Rather, a good PEG ratio should alert you that it may be worthwhile to take a closer look at the stock.