Boeing Co: BA Stock is Lifting Off on Strong Earnings

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Northrop. Grumman. Douglas. Martin. Hughes. Rockwell. Collins. Before undergoing consolidation in the latter half of the 20th century, American-based aviation firms boasted logos comprised of their respective founder’s solitary surname.

Boeing Co: BA Stock is Lifting Off on Strong Earnings

These individuals were visionaries, typically engineers or pilots, who exerted an iron will over their companies and not only changed aviation, but also society.

Boeing Co (NYSE:BA) is the last of the breed and this morning proved that it’s still going strong. Before the market’s opening bell today, Boeing reported that fourth-quarter fiscal 2014 earnings were up a whopping 20% year-over-year. That sent BA stock moving upward in morning trading.

Economic growth, aviation’s expansion and the company’s reinvention as a high-tech aircraft manufacturer position Boeing for growth in 2015 and beyond.

Founded in 1916 by inventor and entrepreneur William Boeing, the company is now the world’s largest aircraft manufacturer by revenue and has done more than any other company in its field to drive advancements, such as the use of revolutionary carbon composites in aircraft manufacturing.

Originally based in Seattle and recently relocated to Chicago, Boeing exemplifies the renaissance in several sectors of American manufacturing after decades in which prophets of doom declared that U.S. manufacturers were all washed up.

Boeing stock was up 6% today and 8% since the beginning of the year, while the S&P 500 Index has fallen about 1%. But BA stock still has fuel left. Boeing earnings in the latest quarter show that demand around the world for the company’s fuel-efficient commercial aircraft is likely to remain persistent, whether oil prices keep falling or not.

Boeing makes military aircraft that are coveted by not only the Pentagon and developed countries, but also emerging nations embroiled in regional disputes. The Pacific Rim is a particularly lucrative source of new contracts for Boeing, as China and Japan square off in the South China Sea and other contested areas. Boeing also makes missile, laser and guidance systems for the military and has contracts with NASA to build satellites.

To be sure, demand for Boeing’s military aircraft slackened somewhat in the fourth quarter, as military budgets felt the pinch of austerity, but this was more than offset by demand for the company’s commercial aircraft as airlines upgraded their fleets and passenger demand got stronger.

The crown jewel in the company’s commercial fleet is the game-changing Dreamliner 787, a composite carbon commercial jetliner that’s efficient, easier to maintain and packed with advanced avionics. Demand for the company’s 737, a workhorse of the international aircraft fleet, also was robust in the quarter.

BA Stock: Value and Growth

Boeing earnings in the fourth quarter exceeded Wall Street’s expectations. The company reported that it earned nearly $1.5 billion, or earnings per share (EPS) of $2.02, compared with $1.2 billion, or EPS of $1.61, in the same period a year ago. Excluding special items, core EPS came in at $2.31; the consensus estimate had been for core EPS of $2.11. Fourth-quarter revenue reached $24.4 billion, beating Wall Street’s forecast of $23.7 billion.

Despite Boeing’s entrenched position in a booming industry, BA stock’s 12-month price-to-earnings (P/E) ratio of 19 is slightly below the P/E of 20.7 for the aviation industry at large. If the European Central Bank’s latest effort at monetary stimulus actually works and jump-starts growth in the flagging eurozone, Boeing earnings could enjoy yet another tailwind as the year unfolds.

As of this writing, John Persinos did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/01/boeing-co-ba-stock-lifting-off-strong-earnings/.

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