Is B/E Aerospace Inc (BEAV) Set to Fly Higher?

Page 1 of 2

Commercial aerospace company B/E Aerospace Inc (NASDAQ:BEAV) delivered a pretty strong set of results recently. It raised guidance and served notice that its backlog of orders plus exposure to wide bodied aircraft deliveries is creating good growth opportunities in 2013. In summary, I like the stock and the trends within aerospace that it is exposed to. However, I consider it to be fairly valued and investors may want to wait for a dip before buying in.

B/E Aerospace Inc Flying High

In order to accelerate learning and avoid going over old ground I will note that I’ve previously discussed BEAV in a blog post linked here, and I would strongly recommend that readers take a look at a recent outline of the key trends in the commercial aerospace industry. The conclusion of the latter piece is that there is evidence to believe that the airlines’ performance within the economic cycle has become relatively better. If so then the companies that supply them (including BEAV) deserve a re-rating even if they still are cyclically aligned.

Turning back to BEAV specifically, here are its business segments and how it made money in 2012.

Its commercial aircraft operations increased revenues in the quarter by 13.9% with operating earnings up 17.9%. This is impressive stuff and reflects the strength of The Boeing Company (NYSE:BA) and Airbus delivery schedules. BEAV is a preferred seating supplier to both airlines and also sells cabin interiors and a range of products including food and drink equipment.

It also has a lavatory system designed initially for the Boeing 737, which is intended for retrofit for airlines. The system creates additional seating on the plane so it has obvious ROI appeal.  I suspect take-up has been lower than expected, but management stated in the conference call that they expect to receive an order ‘in the near future.’

There are a few key trends to look out for with this segment:

  • Governments are not subsidizing loss making airlines as they did before, so the weight of business has shifted somewhat towards new build rather than retro–fit. Older planes are being retired rather than kept going, but BEAV is forecasting a pick up in the aftermarket by 2014.
  • 61% of BEAV’s revenues were driven by new-build.
  • The trend towards wide bodied airplanes is greatly beneficial to BEAV.
  • The issues with the 787 Dreamliner could be a problem, but for now BEAV have been told to deliver as usual by Boeing.
  • A deal for the lavatory system would really kick-start BEAV’s activities at the airplane assembly and possibly open up new opportunities.
  • Retrofit LED lighting will also provide some growth.

So there are plenty of growth drivers alongside the traditional cyclicality within this segment.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!