Shares of Boeing BA have soared over 33% in 2019 to crush the S&P 500’s 11% climb. The aerospace powerhouse’s stock has even outpaced huge comebacks from the likes of Facebook FB. So, let’s see why Boeing looks like a strong buy at the moment.
Boeing announced near the end of February that Brazil-based Embraer SA shareholders approved their joint venture. The proposed deal, which has been in the works for some time now, will see Boeing pay roughly $4.2 billion for an 80% stake in Embraer’s commercial jetliner business. The Chicago-based firm will also take a 49% stake in a new joint venture on KC-390 military aircraft.
The move is projected to help Boeing better compete against European rival Airbus EADSY in the smaller aircraft market, with less than 150 seats. The Boeing and Embraer deal still faces regulatory approval, but is expected to officially close by the end of the year.
Boeing also recently partnered with Reno, Nevada-based Aerion to help push forward the next-generation of supersonic aircraft. BA is set to offer manufacturing, engineering, flight test resources, among other things, in order to bring Aerion’s AS2 supersonic business jet to market. The supersonic aircraft is designed to fly at speeds up to 1,000 miles per hour, or Mach 1.4—roughly 70% faster than current business jets. The AS2 is slated for its first flight in 2023 and is expected to save roughly three hours on transatlantic flights.
As we mentioned at the top, BA stock has soared to start the year, along with fellow Dow components like United Technologies Corp UTX, Caterpillar CAT, Cisco CSCO, and others. The recent climb has seen shares of Boeing hit multiple new highs in 2019. BA stock closed regular trading Tuesday at $430 a share, which marked a roughly 3% downturn from its 52-week high of $446 a share.
Outlook & Earnings Trends
Looking ahead, Boeing projects that it will set a new commercial jet delivery record in 2019. The firm provided guidance between 895 to 905, which would blow past 2018’s previous record of 806. Boeing also said that its Dreamliner jets have remained in high demand from the likes of American Airlines AAL and United Airlines UAL.
Our current Zacks Consensus Estimate calls for Boeing’s Q1 2019 revenues to pop 8.3% to reach $25.32 billion. This would fall short of Q4’s 14% expansion, but investors should remember that Boeing soared well above our fourth-quarter estimate. Plus, BA’s second-quarter revenues are projected to jump 12.3% above the year-ago period. And Boeing’s full-year 2019 revenues are projected to surge roughly 10% to reach $111.16 billion.
Along with the company’s strong top-line projection, Boeing’s adjusted Q1 earnings are expected to surge 16.6% to reach $4.25 a share. The firm’s Q2 EPS figure is projected to skyrocket roughly 45%, with the full-year earnings expected to climb nearly 26%. Investors will also see that the company’s earnings estimate revisions picture has turned far more positive recently.
Boeing’s positive earnings revision activity helps the company earn a Zacks Rank #1 (Strong Buy) at the moment. BA is also a dividend payer that raised its Q1 2019 per share payout by 20% from last year’s $1.71 to $2.055.
Lastly, Boeing stock is trading at 20.9X forward 12-month Zacks Consensus EPS estimates. This represents a discount compared to its two-high of 30.6X and its two-year median of 21.9X, which helps us see that BA stock is hardly stretched, despite its recent climb.
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