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 9-10% 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 5200 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) strong
international demand for its defense products,
(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) mounting
competition against its 737.
Boeing is rated A++ by
Value Line, has a 33% debt to equity ratio (though this is largely a function
of accounting treatments) and its stock yields 2.3%.
Statistical Summary
Stock Dividend Payout # Increases
Yield
Growth Rate Ratio Since 2004
BA 2.3% 15% 44% 8
Ind Ave 1.8
9* 26 NA
Debt/ EPS Down Net Value Line
Equity ROE Since 2004 Margin Rating
BA 33% 33% 2 6% A++
Ind Ave 40 16 NA 8 NA
*most companies in BA industry do
not pay a dividend
Chart
Note:
BA stock made great progress off its March 2009 low, quickly surpassing the downtrend
off its September 2007 high (straight red line) and the November 2008 trading
high (green line). BA is in uptrends
across all timeframes: long term (blue lines), intermediate term (purple lines)
and short term (brown line). The wiggly
red line is the 50 day moving average. The
Dividend Growth and High Yield Portfolios own 90% positions in BA. The upper boundary of its Buy Value Range is
$73; the lower boundary of its Sell Half Range is $199.
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