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Airbus Remains Positioned to Take Advantage of the Commercial Aerospace Recovery; Increasing FVE

Burkett Huey, CFA Equity Analyst

Analyst Note

| Burkett Huey, CFA |

Wide-moat-rated Airbus reported a strong third quarter, as it continues to press its advantage over competitor Boeing in the narrow-body market. Revenue of EUR 10.5 billion and EPS of EUR 0.51 missed FactSet consensus by 3.0% and 4.2%, respectively, though the misses are attributable to required rework on aircraft finished but not delivered. Management is confident that it can get these aircraft delivered by year-end, and we have no reason to doubt this forecast. Adjusted EBIT and free cash flow guidance were increased by 12.5% and 25%, respectively, and we believe that management had previously provided very conservative guidance considering the operating environment. We believe the firm is in sufficient financial state to restart the dividend, and we expect the firm to propose a dividend with full-year 2021 results, given the firm’s policy of delivering 30%-40% of net income to shareholders and we note Airbus tends to pay an annual, rather than quarterly, dividend. We are raising our fair value estimate for Airbus to EUR 137 from EUR 134 ($40 from $39.50 for the U.S.-dollar-denominated shares) due to the time value of money.  

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Company Profile

Business Description

Airbus is a major aerospace and defense firm. The company designs, develops, and manufactures commercial and military aircraft, as well as space launch vehicles and satellites. The company operates its business through three divisions: commercial, defense and space, and helicopters. Commercial offers a full range of aircraft ranging from the narrow-body (130-200 seats) A320 series to the much larger A350-1000 wide body. The defense and space segment supplies governments with military hardware, including transport aircraft, aerial tankers, and fighter aircraft (Eurofighter). The helicopter division manufactures turbine helicopters for the civil and parapublic markets.

Mendelweg 30
Leiden, ZH, 2333 CS, Netherlands
T +31 715245000
Sector Industrials
Industry Aerospace & Defense
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 125,888