International Airlines Group, the parent of British Airlines, announced April 3 that it has booked 18 of Boeing's (NYSE:BA) 787 Dreamliner, a vote of confidence for the embattled plane. Will the order be enough of a boost to keep BA’s stock moving higher? Read on and I'll give you an answer.
 
Stock Price
Boeing announced January 16 that the Federal Aviation Administration was grounding its planes in the U.S. due to safety concerns about the lithium-ion batteries that power the 787s. Subsequently, the planes were grounded around the world. The news commentary at the time wasn't very encouraging. The Economist's headline read "Bad dreams all round." At the time, this was a monumental disaster and they anticipated investors would be heading for the exits... but they didn't. Boeing's stock on January 15 was $76.45 and its closing price as of April 3 was $84.36 - 10.4% higher than before the 787's’ grounding. Hardly a bad dream when you consider the SPDR S&P 500 (ARCA:SPY) was up just 6% in the same period. It's as if investors took a deep breath and came to the conclusion this was much ado about nothing. Onward and upward they charged.

SEE5 Most Costly Product Recalls
                              
Earnings
Boeing's fourth quarter earnings were released exactly two weeks after the grounding of its planes. For the most part the news was good: revenues for the entire 2012 increased 19% year-over-year to $81.7 billion, core operating earnings increased 13% year-over-year to $7.2 billion and operating cash before pension contributions jumped 99% year-over-year to $9.1 billion. Of significance was its backlog which had grown to a record $390 billion by the end of the year with $114 billion of it coming from net orders placed in 2012. With the exception of the 787, it was a banner year for the company.
 
Defense, Space & Security
The smaller of its two businesses managed to have a satisfactory year despite worries of a slowdown in defense spending. It finished 2012 with revenues of $32.6 billion, earnings from operations of $3.1 billion, and a backlog of $71 billion -- more than double its expected 2013 defense revenue. Delivering about 40% of Boeing's overall revenue and earnings, it provides a more consistent revenue stream than the commercial business although not quite as profitable. But close enough to provide some downside protection in leaner times. It's the two in Boeing's one-two punch.

SEE: How To Decode A Company’s Earnings Reports
 
Outlook
Boeing expects to generate between $82 billion and $85 billion in revenue in 2013, which at the high-end is a 4% increase year-over-year. It's not 2012, but this past year was record setting. It's more than satisfactory. On the earnings front it expects core earnings per share of at least $6.10 and possibly as high as $6.30. At the high end we're talking about a 7% increase in core earnings, five percentage points higher than in 2012. Clearly it needs to get the 787 flying again in order to maintain its momentum. All along I've felt Boeing would solve the issues with its newest commercial plane; I expect it to be a big part of a bright future.
 
Actionable Idea
Boeing's stock is up 9.5% year-to-date through April 3. It's trading within it’s five-year high and 21% of an all-time high set in August 2007. It's doing well but definitely can go higher. But will it? The biggest stumbling block is the 787. If it doesn't get clearance to fly in 2013 it will get expensive for Boeing as airlines start suing. The likelihood right now is remote. In February, All Nippon Airways, which operates the largest number of 787s, announced its planes would be grounded until the end of May. Boeing CEO has said it's making good progress on fixing the issues. In mid-March the FAA approved its battery fix for the plane. Now it has to make sure the planes are safe to fly. Flight tests are expected within days. If all goes well, planes could be in the air sometime in May. IAG's order is an indication that the worst is over.

SEE: Turnaround Stocks: U-Turn To High Returns
 
I would think most investment professionals consider Boeing's stock as fairly valued at current levels. However, its PEG ratio of 0.98 is less than both Lockheed Martin (NYSE:LMT) at 1.36 and General Dynamics (NYSE:GD) at 1.47. Once the Dreamliner is back in the air any drag on Boeing's stock will be removed and it will be ready to soar once more. With a backlog of about 800 planes at $200 million a pop, we're talking about $160 billion in future revenue spread over about seven years. That's the kind of potential growth that sets it apart from its peers.
 
If you are looking for immediate results, Boeing's not your stock. However, if you can live with $2 per share in dividends, future deliveries will take care of the capital appreciation. You're buying a great business at a fair price.  

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