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

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top 6 Tax Scams and How to Protect Yourself

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

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!