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  • Brett Schafer

Boeing Shows Again why it is the Easiest Stock to Own

Aviation giant Boeing reported its fourth quarter and fiscal 2018 earnings this morning, impressing analysts and investors. Revenue in 2018 came in at $101 billion and EPS at $17.85, both beating expectations. The stock jumped 6.5% on the news as Boeing is growing quicker than many previously thought.

Here are some more highlights from the report:

  1. repurchased 26.1 million in shares at $9 billion (average price of around $344)

  2. Backlog of $490 billion, includes 5,900 commercial planes

  3. 2019 guidance of around $110 billion in revenue and GAAP EPS of around $22

Besides commercial jets, Boeing manufactures military jets and rocket systems, mainly for the United States government. Even if the commercial jet market stagnates (which probably won’t happen anytime soon) the company will be able to capture sales from the growing space industry.

Boeing continues to diversify out of commercial jets.

Why Boeing is so Easy

What makes Boeing so simple is one number: $490 billion. This giant order backlog, almost 5 times their current annual sales, guarantees a large amount of revenue over the next decade. As well, there are only a few competitors (Airbus, SpaceX, Lockheed Martin) who will compete for any future orders, so this backlog should continue to grow in the coming years.

Another reason to like Boeing stock is it continually gets priced at a low earnings multiple. Today the forward P/E sits at 17 (based on 2019 EPS estimates), a bottom-of-the-barrel ratio for a company with such a rich history.

Boeing is one of those few stocks where the story rarely, if ever, changes. Ten years from now people will still want commercial planes, fighter jets, and rockets. I’m confident Boeing will still be making all three.

Disclosure: The author may have interest in the companies talked about.

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Listen On: Spotify Apple Podcasts Disclosure: The author and podcast guests are not your financial advisors. Ryan Henderson and Brett Schafer are general partners and portfolio managers at Arch Capita

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