Monday, July 22, 2013

Investing in Airplanes

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Boeing (BA) has been in the news a lot lately, and for all the wrong reasons. The company has seen several issues with its high-tech 787 Dreamliner aircraft which many believe is the future for the company Zacks Investment Research reports.

These concerns have led to brief sell-offs for BA, pushing shares sharply lower in some sessions and causing many investors to think twice about investing in the company. However, the company has powered through this weakness and is back at all-time highs, suggesting that these recent problems shouldn’t be much of a concern to investors.


After all, many analysts remain extremely bullish on Boeing and their prospects for the near term. Growth is expected to be in the double digits for both this quarter and the next, while the current year and next year growth rates are also impressive, coming in at 30% and 10.8%, respectively.

This growth rate also represents some acceleration from previous years, suggesting that Boeing is on the right track. Growth for the past five years was at just 1.3%, while for the next five it is moving into double digit range at 10.3%, meaning that this large cap stock isn’t done growing yet.

If that wasn’t enough, estimates have also been surging for both the current year and next year periods, while the Earnings ESP is positive for all four periods studied. The full year consensus has actually slowly risen from $6.39/share 90 days ago to $6.51/share today, suggesting that analysts are increasingly bullish about the company’s near term prospects.

Investors should also note that BA has a pretty stellar record when it comes to beating earnings, with the company crushing estimates in all four of the previous four quarters. Plus, the average beat in this time period has been in the double digits, while the company hasn’t missed earnings at all since early 2011.

Due to this solid earnings history, as well as the company’s robust outlook, Boeing has earned itself a Zacks Rank #1 (Strong Buy). Plus, the company is also in a top industry—roughly the top quintile—so the firm is in great company.

Bottom Line

With earnings fast approaching, BA could be a compelling pick for investors. The company has fought through recent troubles with ease and analysts still like the growth story for the firm.

BA also has an amazing track record at earnings season, and with a positive Earnings ESP, there is no reason to believe that we won’t see a similar result this time around as well.

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