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VIDEOFive Reasons Why Boeing Could Beat Expectations
And any drop in share price should be viewed as an opportunity.
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For one, a sluggish economy means that demand for air travel and airplanes is less than stellar. Additionally, its much-discussed 787 has been delayed more times than the last flight I took out of Newark. That bad press hasn’t exactly been a boon to the company.
Despite these pressures, I think investors ought to be paying a little more attention to the stock:
1. I’ve said it before and I'll say it again: The demand for business and personal air travel will increase sharply in the future, thanks to growing populations, increasing wealth, people's curiosity of far-off lands, and the global nature of the business environment. I can picture the management at Boeing rubbing its hands together in anticipation.
2. Despite the bad-mouthing, it's expected to put up $4.52 a share this year. It trades at under 9.5 times that estimate, which is very cheap for a big name with a potentially big future.
3. If the economy is so lousy and it’s expected to kick out that kind of number, I can’t fathom how much it might earn in a friendlier environment.
4. What’s not to like about the dividend? 5. Everyone seems to think "commercial aircraft" when the company's name comes up. But don’t forget that it produces technology that goes kaboom. And because of that, I believe it will have lots of revenue coming in the door down the line, regardless of how long it takes that darn 787 to get up in the air.
Here’s the rub: Second-quarter earnings are due out this Wednesday and the Street is looking for $1.21. While I’d love to say for sure I think the company will beat expectations, I’m just not that confident. In fact, I could see things go either way. If things do go south, I’d see it as an opportunity, barring any unforeseen and/or drastic surprises.
Incidentally, some of you may wonder why I’m not crazy about the prospects for the airline operators AMR Corp (AMR), Continental (CAL), or Delta (DAL). Pure and simple, it’s because of the huge costs and government regulation that goes part and parcel with the air-travel business. I’d rather hop a ride on the guys that actually make the aircraft.
Another interesting player worth a look is BE Aerospace (BEAV), which makes interior products. Note that insiders had been nibbling at that stock. Switching gears, anyone out there miss the days when they used to pass out peanuts on airplanes?
Hey, have a great day!
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