Textron Inc. (TXT) just proved that beating expectations doesn't always earn you a victory lap. The aerospace and defense company delivered a solid fourth quarter, but shares fell nearly 4% in premarket trading Wednesday after management issued fiscal 2026 earnings guidance that left Wall Street wanting more.

The Numbers Tell Two Stories

Let's start with the good news. Fourth-quarter sales climbed to $4.175 billion from $3.613 billion in the year-ago period, handily beating the $4.098 billion consensus estimate. Adjusted earnings per share came in at $1.73, edging past the street view of $1.70.

For the full fiscal year 2025, Textron's manufacturing group generated $1.3 billion in operating cash flow. The company ended the period with $1.94 billion in cash and equivalents sitting on the balance sheet. During the fourth quarter alone, Textron bought back $187 million worth of shares, bringing total 2025 repurchases to $822 million.

Where the Growth Came From

Textron Aviation had a particularly strong showing, with revenues jumping 36% year-over-year to $1.7 billion. The surge came from $400 million in additional aircraft revenues plus another $67 million from aftermarket parts and services. The division's backlog now stands at $7.7 billion, which tells you something about future demand.

Bell also delivered solid results, with revenues up 11% to $1.3 billion. Military revenues climbed $139 million, primarily thanks to higher volume on the U.S. Army's MV-75 program. Bell's backlog sits at $7.8 billion.

Textron Systems saw a more modest 4% revenue increase to $323 million on higher volume. The Industrial segment wasn't as fortunate, with revenues declining $48 million year-over-year to $821 million in the quarter.

Why Investors Are Nervous

Here's where things get interesting. Textron expects fiscal 2026 adjusted earnings per share of $6.40 to $6.60, compared to the Wall Street consensus of $6.84. That's a meaningful gap, and it's the main reason shares took a hit despite the strong quarterly results.

Revenue guidance of $15.50 billion represents growth from 2025's $14.8 billion, so the top line looks healthy enough. The company expects manufacturing operating cash flow between $1.3 billion and $1.4 billion, with manufacturing cash flow before pension contributions in the $700 million to $800 million range.

The conservative outlook reflects higher investment at Bell to accelerate the MV-75 program, which is weighing on near-term cash flow. Planned pension contributions of around $50 million also factor into the equation.

What Management Is Saying

CEO Lisa M. Atherton emphasized the company's accomplishments across its businesses. "Aviation completed three certification programs while significantly growing revenue as it recovered from the strike in 2024. Bell demonstrated a second consecutive year of 20% growth in military revenues as the MV-75 program continues to accelerate. Systems secured key wins, positioning the business for growth. Industrial streamlined the portfolio with the divestiture of the Powersports business."

She added an optimistic view for the year ahead: "As we move into 2026, our momentum remains strong supported by significant bookings, healthy demand across our markets, continued program execution, and ongoing operational improvements. We are well positioned to continue investing in our products and capabilities to drive growth and long-term value for our shareholders."

Textron shares traded down 3.96% at $90.50 during premarket trading Wednesday.