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Summary

Airbus's gross profits grew by 15.7%, while they unloaded $13.4 million of debt.

Airline capacity is at a five year low, with economic indicators showing that demand for commercial aircraft will increase.

Airbus is a buy, based on both financial statements and economic indicators.

By Eric Mason

With their second quarter earnings reported on July, 11th 2017, accompanied by a small beat in expected earnings per shares, Airbus (OTCPK:EADSF, OTCPK:EADSY) is a solid buy at its current sub $40 price.

Airbus beat earnings per share by about 2.3%, coming in at $0.44 from the market consensus of $0.43. While beating EPS by a penny is usually nothing to move the needle of the investor not already watching or longing a stock, Airbus’s financial statements had a lot of positive news in it.

Starting on the Income Statement, Airbus’s gross profits increased 15.7% from last quarter, finishing at $79.8 million. This is 21.7% higher than the previous three quarters’ average gross profit. An increase in administrative costs did cause operating income to finish at about the same level of the last quarter, with a second quarter total of $21.6 million, though this is to be expected with increased profit and revenues. Continuing operations income held no surprises, but did finish up 15.3% from last quarter at $15.1 million. This increase was primarily caused by a decrease in income tax expense which fell 27.5%, to $5.0 million. Under non-recurring income, discontinued operations posted an uncommon income of $6.1 million, which is ten times higher than what was reported in the last two-quarters, individually. This boosts leaves Airbus with net income of $21.2 million dollars, which all were applicable to common shares. This net income represents a 54.7% increase from last quarter and is 80.2% higher than the previous 3 quarters’ average.

Now a savvy investor knows that income from non-recurring events, like Airbus’ $6.1 million, is not a good judge of a company’s health. With that said, if Airbus’ income statement is adjusted to exclude the hefty non-recurring income, they still saw income applicable to common shares grow by 10.2% from last quarter and beat the three quarters, average by 28.3%. With all considerations, Airbus’ income statement is strong.