Aerospace and defense represent huge, lucrative industries. Aircraft giant Boeing (BA) is the world’s largest manufacturer in both, with revenue evenly split between the two sectors. So right off the bat, Boeing’s stock is one worth considering.
The aircraft company still has a backlog of commercial jet orders from the last decade, helping to keep its coffers full. While economic growth remains tepid in many developed economies, it’s taking off in emerging markets, which should lead to more demand for jets there.
On the military side, the United States and its allies are constantly upgrading weapons systems, which should lead to more business for Boeing, too.
The company’s profit rose 13 percent in the first quarter to $586 million, up from $519 million a year earlier and beating estimates. Revenue dipped 2 percent to $14.9 billion, as Boeing delivered fewer 777s than a year ago. Airplane makers get paid upon delivery.
Boeing’s order backlog climbed 2.5 percent in the first quarter to $329 billion. It still expects its deliveries of commercial aircraft to total between 485 and 500 this year, up from 462 last year. That’s despite a decline of four shipments in the first quarter from a year earlier.
The company has improved productivity on its 737 and 777 jets, boosting earnings. Boeing has reiterated that it will deliver the long-delayed 787 Dreamliner in the third quarter.
Planes in the pipeline
While it is still deciding whether to redesign the 737 jet, Boeing said it has completed 75 percent of testing on the 747-8 Freighter, its largest-ever commercial aircraft. The company plans to deliver the first of that plane around mid-year.
The focus for Boeing “remains much more about new order activity and delivering on the 787 and 747-8 programs than it does about near-term EPS (earnings per share),” Noah Poponak, an analyst at Goldman Sachs, wrote after the earnings report. He maintained his buy rating on the stock.
Of 28 analysts listed on Yahoo Finance, 19 have buy recommendations, with seven holds and two underperforms.
© 2017 Newsmax Finance. All rights reserved.