We just learned that the Boeing Company (NYSE:BA) has won yet another contract, this time valued at $14.3 million, to supply Chinook parts to the Netherlands and Turkey. Falling under so-called foreign military sales categories, this contract will allow these nations to extend the operational life and efficiency of their helicopters. While this order may be small, it follows a much larger $541 million order from the Netherlands in May 2017 for 15 Chinook 47F cargo helicopters. Just last week we learned the company won a $14 billion contract to supply 125 737MAX 8 jets, and a separate order of 100 737MAX 10 jets. Still, this all pales in comparison to the major deal signed by President Trump with Saudi Arabia, spanning decades and valued at $350 billion, of which Boeing stands to receive tons of revenues from, though the exact amount will depend on selected contractors for specific orders over the years. We do know $110 billion took effect immediately for this arms deal. Not to mention, with growing North Korea and U.S. tensions, defense stocks have taken off.
All of this news hurts knowing it has pushed the stock above $200 for the first time ever when I sold one-third of my position in the winter. That hurts. In fact, all of this news is really unreal. No doubt, leaving money on the table like that hurt. Still, I am letting the rest ride, so we cannot be overly disappointed. Remember this is a premier blue chip name and I got into in December 2015. This was as the company raised its dividend and expanded its buyback. The company just raised its dividend again, which is phenomenal for shareholders, but the stock continues to march ahead strongly on every piece of news. But with shares at such a premium versus just a few months ago, where do we stand? Is this share price appreciate truly justifiable? Well to answer this question, we need to consider where the stock is going from here, post this wave of news. To have an understanding of where it is going, we have to review the company’s performance.
Boeing recently reported its Q1 results. It was another strong quarter, but there were some issues that I noted. The company actually missed sales estimates, however it did deliver a nice bottom line beat. While the news was overall fairly well received, the fact is deliveries sales fell. It was not the best quarter on all metrics, but it was a decent quarter overall. The company reported revenue of $20.98 billion in the quarter, falling short of estimates by $370 million. The really issue is that these did fall 7.3% year-over-year. Core earnings per share for the quarter were strong and came in at $2.01. This was a clear beat of $0.06 against analyst estimates.