Analysts on Boeing (NYSE:BA): ‘Strong Buy’
Rising demand for jet aircraft sales drove Boeing Co.’s (NYSE:BA) stock to the top of the DJIA in Y 2017, and record cash flow to fuel projects, sustain dividends and buy back shares could give it another strong year, analysts say.
The resurgence in jet aircraft sales has been driven by solid global economic growth, and now with most of its production issues behind it, Boeing finds itself flush with record FCF (free cash flow) a Key profitability measure watched by investors for industrial stocks.
Boeing shares look to be somewhat undervalued if the company can sustain free cash flow margins in the 13-15% range.
Boeing’s Q-3 FCF margin was 12.45%.
The company has increased its FCF from $1.83-B in Y 2010 to an estimated $10.5-B in Y 2017, an increase of 34% from Y 2016.
The surge in cash flow energized the company’s shares, driving up the stock price by more than 90% in Y 2017. Still, the stock trades at a slight discount to its aerospace peers.
So, if management executes on another year of growth, with Trump’s tax reform and FCF multiples catch up with peers, investoruld s coexpect another +50% year.
CEO Dennis Muilenburg has confirmed that the company expects to grow operating cash flow annually through the end of the decade, adding that it remains committed to returning about 100% of free cash flow to investors.
FCF points to a company’s ability to expand production, develop new products, make acquisitions, pay dividends and reduce debt.
Boeing last month raised its Quarterly dividend by 20% and replaced its existing $14-B share buyback plan with a new $18-B buyback authorization.
Since the end of Y 2012, the world’s biggest airplane producer has given back nearly $40-B to its investors through dividend and share repurchases, while still investing substantially in products, services and people.
Boeing’s management is doing well allocating capital between new projects, acquisitions and buybacks and predicts a return on shareholder equity of 17% that gives shares a “fair value” estimate for Y 2018 of 300 – 360.
Boeing’s stock is in a Bull Market popular among investors, with 13 out of 25 analysts rating it a “buy” or “strong buy.”
Last September the company said it will raise production of 787 Dreamliner jets to 14 a month in Y 2019 from 12 now, indicating reviving faith in wide-body demand.
Tuesday, Boeing said it delivered 763 jetliners in Y 2017 retaining the title of the world’s biggest airplane maker.
|NYSE:BA||318.43||9 January 2018||8.28||310.59||319.91||310.49||5,641,200|
|HeffX-LTN Analysis for BA:||Overall||Short||Intermediate||Long|
|Very Bullish (0.62)||Very Bullish (0.59)||Very Bullish (0.64)||Very Bullish (0.62)|