Why Is Airbus Stock Up Today?

EADSF +4.05%

Key Points

• Software problems and quality control issues have dragged down Airbus stock lately.

• New guidance for 2025 deliveries, earnings, and free cash flow are reassuring investors today.

• 10 stocks we like better than Airbus SE ›

After three days of steadily falling stock prices, shares of European plane-maker Airbus SE (OTC: EADSY) finally turned around this morning and headed higher. As of 10:40 a.m. ET, the aerospace giant's shares are up 4.3%.

There's no obvious reason why.

Airbus stock: Expect turbulence

Airbus is experiencing multiple difficulties with its popular A320 model single-aisle passenger jet, which have weighed on its stock price. Late last month, Airbus temporarily grounded as many as 6,000 A320s over concerns that solar flares could disrupt its electronics, necessitating a (mercifully quick) software fix to compensate.

On Monday, a second shoe dropped when the company warned that manufacturing defects from a supplier introduced variable thicknesses to some of the metal panels that comprise the A320, with some panels being thicker than they should be, and others thinner. As many as 628 planes could be affected, said the company.

The good news here is that only 168 of the planes are currently in service, while the rest are at various stages of production. The bad news is that this is a more complicated fix, involving inspections and, if defective panels are found, time-consuming replacement.

As a result, Airbus says it will probably miss its deliveries guidance this year.

Is Airbus stock a buy?

This morning the company lowered 2025 deliveries guidance from 820 to 790 planes. This isn't good news exactly, but it could have been worse. Airbus estimates that if it hits its new target, it will still earn about $8.1 billion this year and generate free cash flow of about $5.25 billion.

These new numbers value Airbus stock at approximately 23 times current-year earnings and 35 times free cash flow. Not exactly cheap numbers, but investors today seem to think Airbus stock is cheap enough to buy.

Should you invest $1,000 in Airbus SE right now?

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Why Is Airbus Stock Up Today? was originally published by The Motley Fool