Despite a Few Loose Wires, The Boeing Company (BA)’s a Bargain

Another week, another problem with The Boeing Company (NYSE:BA)‘s troubled commercial airplanes program.

As you’ve probably heard by now, inspections centering on a Honeywell International Inc. (NYSE:HON)-manufactured emergency transmitter, that may or may not have been related to a fire aboard an Ethiopian Airlines-operated 787 two weeks ago, have revealed multiple instances of “wiring damage” aboard 787s in the service of airlines ANA and United Continental Holdings Inc (NYSE:UAL). This news — part of a litany of woes involving Boeing planes these past few weeks — helped to shave 1.3% off The Boeing Company (NYSE:BA)’s share price over the course of the week.

But don’t you be distracted. Don’t lose sight of the bigger picture. Because as frightening as some of these headlines may be to investors, the truth is that The Boeing Company (NYSE:BA) is flying along just fine.

You see, in addition to all the wondering about wiring, we also got some definitively good news out of The Boeing Company (NYSE:BA) last week — its Q2 earnings report, which came out Wednesday, and featured:

• 11% earnings growth to $1.41 per share.
• Revenues up 9%.
• Operating profit margins up 40 basis points.
• Operating cash flow that nearly quadrupled to $3.5 billion.

To top it all off, here at the halfway mark, The Boeing Company (NYSE:BA) increased its earnings guidance for the full year to as much as $5.30 per share and said that revenues could come in as high as $86 billion as cuts to defense and space exploration spending turn out to be not quite so deep as feared.

A bit of perspective, please
To put it mildly, these are not the kind of numbers you’d expect to see from a company in trouble, and whose customers fear to buy its products. Actually, the contrary is more likely true.

You see, crucial to the good news at The Boeing Company (NYSE:BA) is that backlog at the company grew $40 billion, largely from new orders received in the second quarter. That means Boeing’s order book grew 11%, or, put another way, Boeing is taking in orders even faster than it collects revenue on old orders already delivered — a clear indication that revenue growth is accelerating.

Valuation
How fast is The Boeing Company (NYSE:BA) growing? Analysts say earnings will grow upwards of 13% annually over the next five years. Meanwhile, the company’s stock sells for just 10.2 times trailing free cash flow. That suggests that Boeing is stock is cheap even if growth is not accelerating.

Now, add on a 1.8% dividend tailwind, and I think the investors who sold Boeing shares last week have made a big mistake. This stock is a bargain, and despite a few issues with its newest plane, The Boeing Company (NYSE:BA) won’t just survive. It’ll downright thrive.

The article Despite a Few Loose Wires, Boeing’s a Bargain originally appeared on Fool.com.

Fool contributor Rich Smith and The Motley Fool have no position in any of the stocks mentioned.

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