Welcome to the Stock of the Day.
What a difference a year makes. This time last year, Boeing (BA) was plagued with bad press surrounding its new 787 Dreamliner and its faulty batteries.
But the company has made a big turnaround in the past four quarters and is close to hitting its production target of building ten 787s per month. Can the aviation giant keep up the momentum? Find out today.
Boeing is one of the world’s largest aircraft manufacturers in the world and it also claims the title of being the U.S.’s largest exporter. Founded in 1916, Boeing serves both commercial airlines as well as air-, land- and sea-based militaries around the globe. In 2012, Boeing brought in nearly $82 billion in total sales, and it is headed towards 4.2% annual sales growth and 31.7% earnings growth this year.
It seems like every week Boeing wins another big order for its airplanes and helicopters. In mid-December, Air Canada announced plans to acquire up to 109 Boeing 737 MAXs, 61 of which are already committed (a deal worth $6.5 billion at list prices).
Then Hong Kong’s Cathay Pacific Airways placed an order for 21 777-px aircraft, a deal valued at $7.0 billion. And just a few days later, the U.S. Army awarded Boeing $661 million to re-manufacture 22 CH-47F Chinook helicopters and to built six more. With its order backlog growing by the day, it’s small wonder that the analyst community has been steadily revising its EPS estimates for FY 2014. Currently, the analyst community is calling for earnings of $7.54 per share—representing 12% annual earnings growth.
Another thing about BA is that it pays a decent dividend—making the top 10% of all Aerospace and Defense companies. And shareholders have a dividend coming their way, with BA going ex-dividend February 12. Shareholders will receive 73 cents per share on March 7. Boeing hiked its quarterly dividend by 50% over last quarter. This dividend works out to a 2.2% annual yield at current prices. The company also just authorized an additional $10 billion in stock buybacks, another plus for shareholders.
Before you buy any stock, you should always run it through my free Portfolio Grader ratings system. And according to Portfolio Grader, BA is a strong buy. 2013 has represented a turning point for the company as it rebuilt its reputation in the wake of battery problems with its 787 models.
In the past 12 months, institutional buying pressure has improved to the point where BA receives an A for its Quantitative Grade. Meanwhile, the company has strong fundamentals overall. Of the eight metrics I graded it on, the company receives As and Bs on six fundamentals, including sales growth, earnings surprises, cash flow and return on equity.
Boeing just needs to work on its operating margin growth and earnings growth, which are both C-rated. BA averages a B for Fundamental Grade.
Bottom Line: As of this posting I consider BA a A-rated Buy.
Sound Off: What do you think about BA? Are you a buyer at current prices? Let me know what you think by posting on our wall on Facebook. For more stock grades and commentary, please visit NavellierGrowth.com!