On Jun 7, 2013, the shares of The Boeing Company (BA) hit a 52-week high of $102.49. Boeing registered positive earnings surprises in the last four quarters, with an average beat of 15.05%.
The first quarter 2013 results of the aerospace and defense major surpassed our expectation. The outperformance was due to solid operating performance fueled by productivity gains and impressive program execution.
Boeing has been receiving consistent orders for its commercial airplanes. In the last two months, the company received orders for 283 airplanes, most of which were for the 737 models. Besides, Boeing was able to sort out the 787 battery related problems, allowing the company to concentrate on production and delivery of the premier commercial model.
In addition, Boeing is also receiving regular contracts from the defense establishments. A recent one is to upgrade the communication system of US B-52 bombers. The company continues to receive orders to build advanced satellites aimed at improving the communication systems of US defense departments.
The strong financial position of Boeing enables it to reward its shareholders through dividend payments and share repurchases. In Dec 2012, Boeing raised its quarterly dividend by 10% to 48.5 cents per share from the previous payout of 44 cents per share. Boeing also announced the resumption of its stock buyback program with repurchases expected to total between $1.5 billion and $2.0 billion in 2013.
We expect long-term earnings growth of 10.26% on the back of sales growth of 5.03%. The Zacks Consensus Estimate for 2013 and 2014 are $6.34 and $7.17, reflecting year-over-year growth of 26.73% and 13.18%, respectively.
Boeing currently retains a Zacks Rank #3 (Hold). Other companies in the industry which are worth considering are Northrop Grumman Corporation (NOC), Wesco Aircraft Holdings, Inc. (WAIR) and Erickson Air-Crane Incorporated (EAC). Northrop Grumman and Wesco Aircraft presently have a Zacks Rank #2 (Buy) while Erickson Air-Crane has a Zacks Rank #1 (Strong Buy).
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