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Yamil Berard
Yamil Berard
Articles (192) 

Boeing Blasts Past Wall Street

Check out Boeing's performance to that of its peers with our new industry overview pages

April 25, 2018 | About:

Boeing Co. (NYSE:BA) shot up over 4% after an earnings and revenue beat toppled Wall Street’s estimates. The world's largest aerospace company stood at over $338 a share in afternoon trading.

Boeing executives reported core earnings of $3.64 a share on revenues of $23 billion in the first quarter. That compared to core earnings of $2.17 per share on revenues of $21.9 billion a year ago. A consensus of nine analysts projected earnings of $2.58 per share on revenue of $22.26 billion in the first quarter.

The picture-perfect earnings altered the grim mood of several weeks ago, when investors feared the company would be impaired by threats of a trade war with China. A major chunk of the company's sales are overseas.

Boeing versus its competitors

GuruFocus provides a tool that can help you compare the growth and performance of companies by sector. You can use the industry overview pages to compare companies using a variety of financial metrics.

A pie chart in the Overview page shows Boeing makes up 27.3% of companies that make up the aerospace and defense industry. The chart also shows competitors Lockheed Martin Corp. (NYSE:LMT) and United Technologies Corp. (NYSE:UTX) comprise roughly another third of the industry, at about 13% apiece.

The chart also allows you to compare Boeing to its competitors using a variety of financial metrics, including median price-earnings ratio, Shiller price-earnings ratio, return on equity and dividend yield.

In price-earnings, Boeing reports 24.70 while United Technologies has a lower price-earnings of 21.24 and Lockheed Martin reported 47.32. In price-sales, Boeing reports 2.16 while United Technologies reports 1.62. A price-sales ratio was not provided for Lockheed Martin.

Lockheed and United Technologies released strong earnings a day ago, only to have their stock prices nosedive in light of the 10-year Treasury yield hitting an all-time high of 3% for the first time in four years. 

Strong valuation and earnings

Boeing, with a market cap of $195 billion, has had a stronger stock performance than its competitors, Lockheed and United Technologies, year to date.

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Year to date, Boeing has seen its stock price rise 15%, while Lockheed’s has risen 2% and United Technologies has fallen 7%. In afternoon trading on Wednesday, Lockheed Martin stood at $327.76 a share, down 2.59%, while United Technologies was just over $121 a share, down 0.74%.

Revenues for the space flight designer and manufacturer climbed by 6% compared to last year. Earnings, on the other hand, jumped 68%, records showed.

In profits, the company pocketed $2.47 billion in the first quarter compared to $1.6 billion a year ago, which is an increase of 57%.

The increase in sales was largely due to strong orders booked during the quarter for defense, services and commercial offerings, including 221 net commercial aircraft orders.

It also saw growth in new business, which included an initial contract for 28 F/A-18 Super Hornets for Kuwait. The company also delivered its first 787-10 Dreamliner and first 737 MAX 9 in the early months of the year, according to its press release.

Guidance

The company has increased its guidance.

For cash flow, the guidance is now between $15 billion and $15.5 billion. Full-year guidance for earnings per share is between $16.40 and $16.60 and core earnings per share (Non-GAAP) guidance increased to between $14.30 and $14.50 per share.

The company also announced it is repurchasing 8.9 million shares for $3 billion.

Guru shareholders

Even after the buzz about the threats of an all-out trade war, many of the world’s top value investors kept positions in the stock. Boeing’s shareholders include Mario Gabelli (Trades, Portfolio), Ken Fisher (Trades, Portfolio), John Buckingham (Trades, Portfolio), Joel Greenblatt(Trades, Portfolio), Steven Cohen (Trades, Portfolio), Caxton Associates (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), David Rolfe (Trades, Portfolio), Tom Gayner (Trades, Portfolio) and David Dreman(Trades, Portfolio).

In the final months of the year, several gurus reduced their positions in Boeing, but only two, Hotchkins & Wiley and Louis Moore Bacon (Trades, Portfolio), sold out.

Strong sales and earnings growth

In 2017, the company reported $93 billion in sales. Sales are split 70-30 between commercial aircraft and defense-end markets, including military aircraft, missile defense, human space flight and launch systems.

Shareholders enjoy a dividend yield of 1.83%, which is 73% higher than its industry competitors. In earnings before interest, taxes, depreciation and amortization, it posted $20.45 per share, compared to $12.11 a share in the prior year. EBIDTA has been steadily climbing for the last 15 years. In 2003, EBITDA was $2.79 a share.

Its Piotroski F-score of 7 indicates a very healthy situation.

The aerospace giant has also seen consistent growth in revenue per share. In the last decade, it has reported revenue growth per share of 6.7%.

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In long-term debt, the company has seen an increase to $9.78 billion from $9.5 billion the year prior. The debt load, however, is lower than in 2003, when it was over $13 billion.

Earlier this month, Boeing had a price-earnings ratio of 24.26 versus the industry’s 24.70. It has a price-book ratio of 543, compared to an industry median of 2.22. Its price-sales ratio is 2.14 versus an industry median of 1.43.

GuruFocus ranks it 6 out of 10 in financial strength and 8 of 10 in profitability and growth.

The Peter Lynch chart suggests the stock is overvalued.

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Rating: 5.0/5 (1 vote)

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