Time to Buy BA Stock on the Cheap After Boeing Dividend Hike?
Shares of Boeing BA surged over 4% Tuesday morning after it announced that it raised its quarterly dividend by 20% and increased its share repurchase plan. This is clearly great news for Boeing investors. But Boeing also currently boasts other strong fundamentals that make it look like a "cheap" buy heading into 2019.
Dividend Hike & Repurchase Plan
Boeing announced on Monday that its Board of Directors declared a new quarterly dividend of $2.055 a share. This marks a 20% climb from the $1.71 per share Boeing paid throughout 2018. Better yet, the aerospace powerhouse’s new divided represents a roughly 45% jump from the $1.42 a share BA paid in 2017 and represents an increase of roughly 325% from 2013’s $0.485 a share.
Clearly, these massive dividend hikes show that the company is committed to returning value to its shareholders. But more importantly, it helps highlight Boeing’s improved efficiency.
On top of the new quarterly dividend hike, Boeing replaced its existing share repurchase program with a new $20 billion authorization, which is up from the $18 billion approved last December.
Investors should note that Boeing spent $9 billion on stock buybacks in 2018. Boeing’s repurchases are expected to resume in January 2019 and are set to be made over the next 24 months. Boeing’s new quarterly dividend will be payable on March 1, 2019, to shareholders of record as of February 8, 2019.
Overview
At this point, shares of Boeing and fellow giants such as Caterpillar CAT have fallen victim to the larger market selloff over the last three months on the back of uncertainty surrounding the U.S. and China trade spat. Despite continued talks and a 90-day cease-fire, it is unclear what will happen next. Yet, Boeing’s outlook appears strong and Cowen aerospace analyst Cai von Rumohr told clients recently that BA is his number one pick for 2019.
Outlook & Earnings Trends
Moving on, our current Zacks Consensus Estimate calls for Boeing’s Q4 revenues to pop 6.3% to hit $26.96 billion. The firm’s full-year revenues are projected to jump by 7.1% to reach $99.85 billion. Looking even further ahead, Boeing’s 2019 revenues are projected to pop 6.25% above our fiscal 2018 estimate to reach $106.1 billion.
Meanwhile, Boeing’s adjusted Q4 earnings are expected to slip by 6% from the year-ago period. But investors should be happy to see that BA’s fiscal 2018 earnings are projected to surge 25%, with fiscal 2019’s earnings expected to climb 20% above 2018.
Boeing has also seen its earnings estimate revision activity turn much more positive recently, as the chart below shows us.
Price Movement
Along with Boeing’s newly lifted quarterly dividend and all of the other positives, BA stock currently sits roughly 16% below its 52-week high at $330.18 a share—including Tuesday’s early morning jump. This alone could set up a solid buying opportunity for those high on BA stock.
Plus, if we look over the last five years, Boeing stock has outpaced its industry’s average, which includes the likes of General Dynamics GD, Lockheed Martin LMT, and Northrop Grumman NOC. Boeing has also destroyed its commercial airplane rival Airbus EADSY.
Bottom Line
Boeing is a Zacks Rank #2 (Buy) at the moment, based, in large part, on its positive earnings revision activity. The company also sports an “A” grade for Growth in our Style Scores system.
On top of that, BA is currently trading at 17.6X forward 12-month Zacks Consensus EPS estimates, which marks a new 52-week low and a massive discount compared to its year-long high of 30.6X. This means we can say with some confidence that Boeing stock is rather inexpensive at the moment compared to where it has traded over the past year.
Therefore, it seems like now might not be a bad time to think about buying Boeing stock as we inch closer to 2019.
3 Medical Stocks to Buy Now
The greatest discovery in this century of biology is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating revenue, and cures for a variety of deadly diseases are in the pipeline.
So are big potential profits for early investors. Zacks has released an updated Special Report that explains this breakthrough and names the best 3 stocks to ride it.
See them today for free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
General Dynamics Corporation (GD) : Free Stock Analysis Report
Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
The Boeing Company (BA) : Free Stock Analysis Report
Caterpillar Inc. (CAT) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
