Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : BE Aerospace (BEAV) Breakout -- Ignore unavailable to you. Want to Upgrade?

To: Harry Abruzzese who wrote (86)	2/17/1998 12:41:00 AM
From: Stefan Gruenwald	Read Replies (1) \| Respond to of 210

BEAV was named stock of the day on Feb 13, 1998. Nice article and BEAV might move straight up from here. One of my broker friends said that a lot of brokerage houses and mutual funds are currently considering it and buying back in. Let's hope and cross our fingers. Looks still kind of undervalued. Stefan Here is the news: Stock of the Day (Archive) Feb 13, 1998 B/E Aerospace: Cleared for Take-Off? If you've flown on a commercial airline lately, chances are you encountered a B/E Aerospace product. You may have sat in it, got your delicious meal out of it or watched and listened to it. B/E's business of aircraft cabin interior products is booming, and the stock was flying first class until an order cancellation last year carved 50% out of the share price. New orders continue to stream in, though, and with the stock trading at a big discount to its growth rate, B/E Aerospace (Nasdaq:BEAV - news) is starting to regain some altitude. The commercial airline industry is in the midst of a major cyclical upswing. Just ask Boeing (NYSE:BA - news) , which a few months ago had to warn that it couldn't keep up with all the orders coming in for new aircraft. In addition to new planes being built, carriers are pouring millions of dollars into refurbishing their existing aircraft. B/E has won contracts with nearly every major airline for at least one product or another. Just last month US Airways awarded a seat contract to B/E worth an initial $27 million, with options that could increase the value to $85 million. In addition to aircraft seats and food storage/preparation equipment, B/E is doing a banner business selling In-Flight Entertainment systems. The company's newer in-seat video systems allow passengers to choose from multiple channels of video entertainment, and the premium versions include fully interactive features such as video-on-demand, video games, gaming, shopping, in-flight information programs, telephony, etc. The company has experienced some reliability problems with its high-end entertainment systems, though, and that apparently led to the British Airways order cancellation last year which touched off a nasty slide in B/E's stock. Nonetheless, B/E is confident that its In-Flight Entertainment group and its expanding product lineup will contribute significantly to the company's growth going forward. In the December earnings report, B/E's CEO said "Record operating results by the airlines, coupled with the high level of requests for quotations for new programs reinforce our expectations for continued growth in revenues and earnings as we look out over the next several years." Order backlog at the end of B/E's fiscal third quarter (Nov.'97) stood at $560 million, up 33% from the year ago period. Earnings are expected to more than double for fiscal year 1998 (which ends this month) to $1.46 per share, according to the First Call analyst survey. Another 48% gain is projected for the next year. The expectations for continued impressive earnings growth and the sharp drop in the stock price combine to make a valuation case worth investigating. The stock tumbled from a peak of $41.50 in September to $20.50 in December. At its current price of $28.25, B/E Aerospace is trading at a P/E of 21 using trailing earnings or 14.5 times Calendar 1998 estimates. The price-to-sales (PSR) ratio comes in at just 1.4, and B/E has a Return on Equity (ROE) of 19.4%. In judging how these numbers stack up, investors should keep in mind that the commercial aircraft industry is highly cyclical, so the boom that is expected to continue for the next few years will some day be replaced with less-than-glorious times. It is in such times that B/E's debt-to-equity ratio of 1.13 could become an issue. For the immediate future, though, the skies look bright for B/E Aerospace and its cabin interior business.