How did TXT's Q4 2024 earnings surprise investors?

Textron's Q4 2024 earnings report reflected a net income of $141 million, which, when compared to the previous year's same quarter, presented a notable decline. This performance fell short of investor expectations, as indicated by the company's reported earnings per share (EPS) of $1.40, missing the consensus estimate of $1.46 per share. This shortfall in earnings and revenues contributed to a notable earnings surprise of -4.11%, further underscoring the disappointment in the quarterly results.

1. **Revenue Growth Amidst Challenges**: Textron's revenue for the quarter was reported at $3.43 billion, marking a 2.5% increase from the corresponding period in the previous year. However, this growth was not enough to offset the impact of higher expenses, which squeezed profit margins.

|code|Ticker|Name|Date|Net Income YoY|Net Income|market_code|
|---|---|---|---|---|---|---|
|TXT|TXT.N|Textron|2024 Q1|5.2356020942408374|2.01E8|169|
|TXT|TXT.N|Textron|2024 Q2|-1.520912547528517|2.59E8|169|
|TXT|TXT.N|Textron|2024 Q3|-17.100371747211895|2.23E8|169|
|TXT|TXT.N|Textron|2024 Q4|-28.78787878787879|1.41E8|169|

2. **Profit Margin Compression**: The company's profit margin for the quarter stood at 6.5%, a significant decline from the 8.0% margin recorded in the same quarter of the previous year. This reduction was primarily driven by increased expenses, which adversely affected the company's bottom line.
3. **Market Reaction and Outlook**: The market responded negatively to the earnings report, with Textron's stock price reflecting the concerns over wage inflation and the aviation cycle risks. Despite a new contract in the Aviation segment and backlog growth in the Bell segment, the broader market sentiment remained cautious due to the perceived risks and the impact of the strike in the Aviation segment.

In summary, Textron's Q4 2024 earnings fell short of investor expectations, primarily due to higher expenses leading to a compression of profit margins. Despite a slight revenue increase, the decline in earnings per share and the negative market reaction highlight the challenges faced by the company during the quarter.