On Nov 14, 2013, the shares of
The Boeing Company
) hit a 52-week high of $135.38. Boeing registered positive
earnings surprises in the last four quarters, with an average
beat of 11.96%.
Why the Bullishness?
Despite the machinists' union overwhelmingly refusing a new labor
contract recently pertaining to 777 production and manufacturing
jobs, the future of the aerospace giant seems to be robust.
Backlog at third quarter 2013 end remained strong with more than
4,800 airplanes valued at a record $345 billion.
Boeing also estimates that carriers in the Middle East will need
2,610 new airplanes over the next 20 years, worth a staggering
$550 billion. The Boeing 777 and 787 Dreamliner will likely
continue to dominate the order books in the Gulf region,
reflecting the global network priorities and emerging alliances
and partnerships of the region's carriers.
Last month, the company reported stellar third quarter 2013
results on the back of a solid performance across the company's
businesses. The company's strong numbers came from solid
operating performance fueled by higher aircraft deliveries along
with customer-focused business strategies and disciplined
Boeing also boosted its full-year 2013 GAAP earnings guidance to
the range of $5.40-$5.55 from its previous expectation of
$5.10-$5.30. The adjusted earnings guidance was raised to
$6.50-$6.65 per share from $6.20-$6.40 earlier.
Although the threat of defense cutbacks will loom over the
company going forward, Boeing still remains optimistic with a
2013 defense revenue target of $31.5 billion to $32.5 billion and
an operating margin of more than 9.25%.
Despite the many technical glitches plaguing the much-hyped
Dreamliner, the company remains well on track with its backlog
and deliveries. During the third quarter, its commercial unit
completed the first flight of the 787-9 and delivered 170
airplanes. Sequestration and budget cut notwithstanding, its
defense segment maintained a solid performance and fetched $7
billion in fresh new orders.
The expected long-term earnings growth rate for the company is
set at 10.93% while the Zacks Consensus Estimate for 2013
reflects an estimated 34.1% jump to $6.71 from $5.00 in 2012.
Boeing currently holds a Zacks Rank #2 (Buy). One can also look
Lockheed Martin Corp.
Northrop Grumman Corp.
Huntington Ingalls Industries, Inc.
) as good buying opportunities. These defense operators -
sporting a comparable Zacks Rank #2 (Buy) - have solid growth
stories with the potential to rise significantly from current
BOEING CO (BA): Free Stock Analysis Report
HUNTINGTON INGL (HII): Free Stock Analysis
LOCKHEED MARTIN (LMT): Free Stock Analysis
NORTHROP GRUMMN (NOC): Free Stock Analysis
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