Boeing Co. (BA, Financial) has had a spectacular performance this year, with its stock rising more than 82% to new record highs. Although Boeing operates in a cyclical industry, its long-term outlook remains solid.
Over the past five years, the company’s bottom line has surged at an annual rate of almost 9%. Regardless, analysts are predicting even better growth in the coming years considering the rise of middle-class families in Asia, Africa and Latin America.
During the Paris Airshow, Boeing accumulated nearly 435 commitments along with 100 options for its new 737 MAX, 787 and 777 airplanes. Since then, the company has finalized more than 40% of the commitments, which is impressive.
The most important thing to notice is that despite facing fierce competition, the aircraft manufacturer has successfully managed to achieve massive orders from key customers, enabling it to escalate production on its Boeing 787 program.
Boeing is also aggressively focusing on solidifying its product lineup. The company recently launched its new Boeing 737 MAX 10, which is the most profitable single-aisle airplane for airlines.
Boeing also performed well at the Dubai Airshow in November. The company bagged nearly 250 orders and commitments. The 787-10 Dreamliner, a wide-body aircraft, received 45 orders and commitments, throwing light on the positive momentum for Boeing's Dreamliner series.
Throughout the year, Boeing secured nearly 100 firm orders for the 787 family. Emirates recently announced a commitment for 40 787-10s, which is pretty amazing as it is expected to carry the highest profit margin among the 787 family.
The aircraft manufacturer currently has more than $15 billion worth of orders in its pipeline, which could start materializing in early to mid-2018.
Moving forward, Boeing will likely announce a new quarterly dividend for the coming year in December. Over the past several years, the company has nearly tripled its quarterly dividend and should continue increasing its dividend at a steady rate in the future. Last year alone, it raised its dividend by almost 30%.
Conclusion
Although shares of Boeing have surged more than 80% this year, they are not overvalued and still have plenty of fuel to run higher. The aircraft manufacturer continues to gain huge orders and commitments. While the company has bagged significantly higher orders for its single-aisle aircraft, orders for its wide-body aircraft are also inching upward.
Boeing currently offers a healthy dividend yield of 2%. It trades at a reasonable price-earnings (P/E) ratio of 26. The company's earnings, cash flow and dividends continue to grow at a healthy rate, which makes it an excellent long-term investment.
Disclosure: I do not hold a position in the stocks mentioned in this article.
