Boeing (BA) 2012 Review

Boeing Co. is a leading manufacturer of commercial aircraft, business jets, military aircraft as well as variety of command and control and advanced radar systems.  The company has grown profits and dividends at a 5-10% annual rate over the past 10 years earning a return on equity in excess of 20%. 

The key factor in BA’s financial performance of late has been the 787 Dreamliner.  While the company was initially plagued with delays, those problems appear to have been corrected and back log now stands at approximately 4000 and should keep Boeing at full production for years.  Other positive factors include:

(1) an underlying demand driven by increasing commercial air travel and the need to reduce fuel costs are pushing airlines to replace their fleets,

(2) a broadly diversified defense business that has strong bookings and a rising backlog,

(3) acquisitions,

(4) an ongoing stock buy back program.

Negatives:

(1) a large percentage of its sales are to governments and therefore subject to cutbacks as budgets are tightened,

(2) most of its contracts are fixed price, hence requiring constant vigilance in holding costs down,

(3) global economic uncertainty could impact commercial aircraft sales.

            Boeing is rated A+ by Value Line, has a 64% debt to equity ratio (though this is largely a function of accounting treatments) and its stock yields 2.6%.

Statistical Summary

                 Stock      Dividend         Payout      # Increases  

                Yield      Growth Rate        Ratio       Since 2002

BA             2.6%           7%              31%               7

Ind Ave      1.3              8*               22                 NA 

               Debt/                       EPS Down       Net        Value Line

               Equity         ROE      Since 2002      Margin       Rating

BA            64%            47%            3                5%           A+

Ind Ave     35               21              NA              9             NA

*most companies in BA industry do not pay a dividend

    Chart

            Note: BA stock made good initial progress off the March 2009 low, quickly surpassing the downtrend off its October 2007 high (red line) and the November 2008 trading high (green line).  Long term, the stock is in an uptrend (the straight blue line is the lower boundary).  Intermediate term, it is in a trading range (purple lines).  The wiggly blue line is on balance volume.  The Dividend Growth Portfolio and the High Yield Portfolio own full positions in BA.  The upper boundary of its Buy Value Range is $62; the lower boundary of its Sell Half Range is $138.

http://finance.yahoo.com/q?s=BA

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