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Boeing Stock Analysis

Boeing Stock Analysis

Surely, you’ve heard of Boeing (NYSE: BA)? The world’s largest aerospace manufacturer and the third largest defense contractor? Chances are that if you have ever been on an airplane, you’ve used a Boeing product. But Boeing has a lot more going on than just its commercial airline manufacturing. The company has four distinct segments: Boeing Commercial Airlines, Boeing Defense, Space & Security, and Boeing Global Services and Capital. What does that mean for Boeing stock analysis?

What Is Boeing?

Boeing itself was established back in 1916 in Seattle, Washington.

It was founded by aviation pioneer William E Boeing, and was originally called the Aero Products Company.

As of 2022, Boeing is the largest US exporter of goods by dollar value and has over 141,000 global employees.

The company has a market cap of $89 billion USD as of April.

It’s one of the more influential stocks on the market. Boeing is a component of Dow Jones Industrial Average and the S&P 100. So what does that mean for Boeing stock analysis?

Boeing Stock Analysis and Performance

It hasn’t been the best few years for Boeing shareholders, and this is true even before the COVID-19 pandemic.

Shares of the company are down by nearly 20% over the past five years and more than 35% over the past 52-weeks. 

Boeing was once a blue-chip stock, but the erosion of global travel during the pandemic showed its weakness.

Not only did Boeing lose much of its market cap over the past few years, but it also stopped paying its dividend to shareholders. With no travel came a stoppage in airplane orders from airline companies

On the bright side, with global travel reopening Boeing has built up a backlog of orders. According to its recent earnings call,

Boeing has a backlog of 4,200 planes valued at over $291 billion. This is one company that is welcoming the resurgence of global travel with open arms! 

Boeing’s Product Line: Defense and Military

Boeing has a vast product lineup. While most consumers will recognize its commercial airline models, a lot of the company’s value lies in its other segments. Take Boeing Defense for example.

Boeing currently has a $60 billion backlog in defense orders with the US military being one of its largest customers.

Here are some of the defense and military aircrafts that Boeing makes and how it affects Boeing stock analysis.

Boeing Stock Analysis: AH-64 Apache Helicopter

This US Army model is the world’s most advanced and proven attack helicopter. Over 1.3 million have been to combat since its inception in 1984. Boeing owns the production contract until 2028 and is the chosen attack helicopter for the next few decades. Some of the most powerful militaries in the world use the AH-64 Apache including the US, Japan, the UK, and Israel. 

B-52 Bomber

One of the more widely known military aircraft, the B-52 is in its sixth decade of operational service. It is the most combat capable bomber and an exclusive vessel for the US military. The plane carries over 70,000 lbs in armaments, and is a crucial part of the US national defense strategy. 

Boeing Stock Analysis: Air Force One

The official airplane of the President of the United States, the Boeing 747-8 has carried everyone from Roosevelt to Biden. Air Force One is a massive plane, with a longer flight range, personal offices and quarters for the President and First Lady, and even two galleys that can serve up to 100 meals at a time. The plane has over 4,000 square feet of floor space and includes state of the art navigation technology

V22 Osprey

The tagline for the V22 Osprey is that it is “unlike any aircraft in the world”. It combines the tilt rotors and vertical agility of a helicopter and the speed and range of an aircraft. The Osprey is one of the most versatile aircrafts that Boeing makes and exclusively serves the US and Japanese militaries. 

Boeing’s Product Line: Commercial Aircrafts

Boeing makes most of the world’s commercial airplanes and owns a near duopoly on the market with Airbus. If you have travelled domestically or internationally, chances are you have flown on a Boeing aircraft. Here are some of Boeing’s commercial aircrafts:

Boeing Stock Analysis: Boeing 777

The 777 is an aircraft built with long range, fuel efficiency, and passenger comfort.

It is most often used for international flights, and is one of the most frequently used airplanes in the world.

The company also has the 777X which will be the world’s most efficient twin-engine jet when it hits the air in 2025.

The 777 is used by a majority of the world’s airlines including Japan Airlines, Emirates, Cathay Pacific, United, and KLM.

Boeing 787 Dreamliner

Another long-range, massive aircraft, the 787 Dreamliner has been in operation since 2011. Improved fuel efficiency and range have made this one of Boeing’s most profitable aircrafts per passenger flight. It is also used by some of the world’s largest airlines including British Airways, Air Canada, Air China, and Singapore Airlines.

Boeing 747

Another versatile aircraft that operates as one of the main freighter planes in the world. The 747 can carry a massive cargo as well as seat 400 passengers, combining the best of both worlds. This duality allows Boeing to capture maximum profits from these planes. The Boeing 747 is used by UPS, Nippon Cargo, and Lufthansa, amongst others. 

Boeing Stock Analysis and the 737-Max Controversy

You have probably noticed that I did not include what is probably Boeing’s most well known model: the infamous 737-Max.

The Max is the fourth generation of Boeing’s 737 plane and has been in the air since 2017.

Most of the negative headlines stem from two tragic fatal plane crashes in Indonesia and Ethiopia.

The problems with the plane stemmed from its MCAS or Maneuvering Characteristics Augmentation System. Flight authorities like the FAA and airlines around the world banned the 737-Max from being in use. The first iterations of the plane were a colossal failure for Boeing, causing a major drop in its stock. 

Most major flight authorities have recertified the 737-Max for flight again after Boeing corrected the MCAS issues. The company has stated that it hopes to deliver the rebuilt planes to airlines by the end of 2023. 

Who Are Boeing’s Rivals?

As mentioned, there is not a ton of competition in the commercial aviation industry. Boeing does have more competition in the defense and military segment, so let’s take a look at some other stocks in Boeing’s industry. 

Airbus SE (EPA: AIR)

Airbus is a European multinational aerospace company that was established in 1970. The company is based out of several major European cities including Hamburg, Germany, Toulouse, France, Madrid, Spain, and Leiden in the Netherlands. Airbus also has several different segments, which include Commercial Aircraft, Defense and Space, and Helicopters. The company has partnerships with several notable airlines including Delta, Lufthansa, and American Airlines. 

Lockheed Martin (NYSE: LMT)

Lockheed Martin is one of America’s largest aerospace and defense companies. The company was established in 1995 and is based out of Bethesda, Maryland. Some of Lockheed Martin’s well known vehicles include the Black Hawk Helicopter, the F-16 Fighting Falcon fighter jet, and the Sikorsky line of military helicopters. The company also deals in military technology with UAVs, state of the art navigation, and even unmanned aircraft technology. LMT stock is a component of the S&P 100 and has a market cap of $118 billion. 

Raytheon (NYSE: RTX) 

Raytheon is yet another American aerospace and defense company. The original company was founded way back in 1922, and its current iteration is a merger between Raytheon and United Technologies. Its segments include Collins Aerospace, Pratt & Whitney, Raytheon Intelligence & Space, and Raytheon Missiles & Defense. Raytheon’s stock is a component of the S&P 100 and has a market cap of $146 billion. 

Final Thoughts

Boeing’s general stock weakness is a culmination of a number of headwinds for the company. The COVID-19 pandemic was detrimental to global air travel, and had a serious impact on the company’s revenues. Boeing already had bearish sentiment, due to the ongoing issues it had with the 737-Max model. Recalls and malfunctions are one thing, but multiple fatal crashes are not soon forgotten by investors. The elimination of the company’s quarterly dividend is another factor for long-term investors. 

As it stands, Boeing’s stock is grasping for a bottom on its recent downtrend. The recent quarterly earnings weren’t great as the company reported a year over year decline in revenues. One positive for Boeing is that it seems that the worst of the COVID-19 pandemic is behind us. Global travel has opened up in a major way which should help Boeing work through some of its order backlog.

For value investors, Boeing might be worth looking into as a long-term investment. The stock is trading at a price to sales ratio of 1.6. Shares are trading below the key 50-day and 200-day moving averages, which indicates a long-term downtrend. The thing with Boeing, is it is not going anywhere. The company’s business is set to explode in the next year or two, and this could be a near-term bottom on the stock. This is not financial advice, but Boeing’s stock looks ripe for a rebound over the next couple of years. 


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