Boeing Co (NYSE:BA) recently reported a staggering second quarter and increased its guidance. The stock seems a promising investment for a variety of reasons. Boeing Co (NYSE:BA) cash from operations in the second quarter came in at $5 billion, double the analysts’ estimates of about $2.5 billion. Boeing also reported a backlog of 5,700 aircraft orders, which are enough to keep the company busy for seven years. JP Morgan’s analyst Seth Seifman called the quarter “watershed” for the company. Even though Boeing’s revenue fell 8% year over year, the company managed to lower its costs by 17%. Boeing Co (NYSE:BA) has gained about 50% year-to-date.
Boeing Co (NYSE:BA) is experiencing a massive surge in orders amid rising travel trend worldwide. The company said in a statement that air passenger traffic outpaced global economic growth in 2017, and air cargo traffic grew by 10% for the first five months of this year.
Boeing Co (NYSE:BA) is also a major benefactor of lower interest rates, as the company keeps replacing its aging planes with new, fuel efficient planes by borrowing money from banks.
Boeing is also cutting capital expenditures successfully. Investment firm Jefferies analyst Howard Rubel said in an interview with CNBC that Boeing’s cost cutting is “remarkable” and the company’s 2018 and 2019 revenues will be better than expected. Boeing laid off over 2,000 jobs this year.
Financial services firm Argus recently Increased its price target for Boeing to $270. It has a “Buy” rating for the stock. The firm cited a 30% dividend increase by the company as a reason for its strong rating.
In the commercial sector, Boeing Co (NYSE:BA) has almost no strong competitor, but the company is facing tough competition in the defense sector. Recently, Boeing’s competitor Northrop Grumman won an $80 billion contract for the next generation of long-range stealth bombers. Defense giant’s fighter jets will replace Boeing’s F-18 hornets and F-15s. This will hurt Boeing Co (NYSE:BA) revenue in the coming months, but experts think that Boeing has a backup plan as it is now increasing its presence in the space industry. Boeing already makes several products for the United States Space Program. Boeing’s revenue in the second quarter fell mostly due to the planned reduction in 777 and 737 sales. However, this initiative improved margins and free cash flows.
The demand for Boeing Co (NYSE:BA) planes is rising in Asia as well. In July, it was reported that Boeing received record number of orders from India, a thriving market. Similarly, Iran is interested in several major contracts with Boeing.