IN 2003, you could have bought all the stock you wanted for $1.20 a share. Now they'll cost you $41. Of course, in 2004, the company was losing money, to the tune of 53 cents a share for the year. Last year, it turned in $1.10 in profit. This year, analsysts think it will be $1.65 and are predicting $2.10 for next year. Revenues have launched just as quickly, going from $733.5 million in 2004 to this year's anticipated $1.6 billion and next year's $1.9 billion. Look for sales to grow, on average, by 14% a year over the next 5 years, while earnings increase by 29% a year, on average, in the same time period.
Earnings for the first quarter were 40 cents a share, double the same quarter from the previous year and above most analysts' predictions. Sales of aircraft seats and other interior products were more robust than originally thought. It looks very positive for the rest of the year, at a minimum, as Boeing and Airbus need premium and first class seats for their new jumbo and mid-size jets.
Analysts think profitability will continue to climb as BE has raised prices on its seats, and customers keep coming back for more. Also, management is focused on cost cutting and driving profit margins higher. Expectations from analysts suggest net profit margin could go to 130 basis points this year.
In addition to Boeing and Airbus, commercial airlines are looking to upgrade their fleets as well as lighten their loads. Delta has just emerged from bankruptcy, and Northwest is about to. They'll both be looking to upgrade their seating in the next year or two. Furthermore, BE's seats are lighter than most of its competition, contributing to better fuel economies for the big jets.
Some other numbers: Current assets are over 4 times current liabilities. Return on equity is 12% with 13.5% predicted for next year. Institutions were heavy buyers in the third quarter of last year, 144 decided to add the stock while only 74 decided to sell it. This is a mid-cap company of $3.4 billion.
Check out BE Aerospace if you think the airline industry will continue its comeback. Good quality seats are part of every airline fleet, and BEAV makes some of the best.
The Good: Earnings on the rebound, growing nicely. The Bad: Stock has run up strongly in 3 years. The Beautiful: Demand for product is way up and headed higher.
Disclosure: Author has no position in BEAV