How Will Boeing (BA) Stock Be Affected By New $56 Billion Plane Deal?

NEW YORK (TheStreet) -- Shares of Boeing Co.  (BA) are up 0.95% in pre-market trade to $128. after Dubai airline Emirates today concluded a $56 billion order to buy 150 Boeing 777X jets, firming up a commitment made last year after dropping an order with Airbus (EADSY), Reuters reports.

The deal includes purchase rights for an additional 50 airplanes which, if exercised, could increase the value to about $75 billion at list prices, Boeing said.

Must Read: Warren Buffett's 25 Favorite Growth Stocks

 

TheStreet Ratings team rates BOEING CO as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate BOEING CO (BA) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • BA's revenue growth has slightly outpaced the industry average of 3.2%. Since the same quarter one year prior, revenues slightly increased by 8.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 112.21% to $1,112.00 million when compared to the same quarter last year. In addition, BOEING CO has also vastly surpassed the industry average cash flow growth rate of 44.19%.
  • BOEING CO's earnings per share declined by 11.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BOEING CO increased its bottom line by earning $5.97 versus $5.12 in the prior year. This year, the market expects an improvement in earnings ($7.68 versus $5.97).
  • The debt-to-equity ratio is somewhat low, currently at 0.62, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.38 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. When compared to other companies in the Aerospace & Defense industry and the overall market, BOEING CO's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • You can view the full analysis from the report here: BA Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

If you liked this article you might like

Crazy Weak U.S. Dollar Will Make These 10 Companies Huge Winners

Defense Contractors Exploring India Deals Want to Safeguard Their Technology

Here Are Monday's Hottest Stocks as the Dow Reaches New Records

First Leg Down of United Tech; Hurricanes -- Jim Cramer's Top Thoughts

Here's Where Wall Street Stands