Invest in Boeing: Three Years of Stats

Boeing currently sells for $130 a share. That is after a gap up after the company reported better than expected cash flow based on a lot of plane deliveries. Back in 2011 when we suggested that investors look at this stock as an exercise in fundamental analysis of big cap stocks poised for a run up in price. Back then Boeing was selling for $60 to $80 a share. The share price started to go up in 2013 and the stock now trades in the $130 to $140 range. Boeing pays a seventy-three cent per share dividend which at the current share price comes to a two and a forth percent yield. Earnings per share are just under six dollars. But, if you want to invest in Boeing now you will want to know the intrinsic value of the stock.

Invest in Boeing for Forward Looking Dreamliner Earnings

This brings us back to our 2011 argument for why you might want to invest in Boeing. The aerospace giant delivered the first Dreamliner to All Nippon Airways at a ceremony at the Boeing Everett Plant in the state of Washington on September 26, 2011. The delivery of the first aircraft is three years behind schedule. Half of the structure of the 787 is carbon composite materials reducing the plane’s weight and resulting in a twenty percent reduction in fuel consumption compared to jets in its class. This will allow the 787 to fly longer routes. The Boeing 787 takes advantage of a lot of new technologies including new lithium batteries that caused fires and the grounding of the entire fleet of Dreamliners for part of 2013. The plane is more comfortable than other jets with features like larger windows and storage space for carry-ons. The new jet goes for around two hundred million each depending upon design variations. Two hundred million times eight hundred orders at the time of our first article comes to roughly one hundred and sixty billion US Dollars. Today Boeing has delivered 132 of these jets and has orders for a thousand more. This means that Boeing can expect cash flow just from the Dreamliner of two hundred billion dollars in the next few years.

Other Boeing Operations

Boeing does not limit itself to making high tech airplanes. The company makes and launches satellites to orbit the earth. Visit this link to see a current Boeing Satellite launch schedule. Combined aerospace operations make Boeing the largest US exporter by dollar value. All of US agriculture runs a forty-five billion dollar trade excess. Boeing runs a trade excess of more than fifty billion each year! The company is unique in an extremely high cost of entry set of markets and as such is likely to grow and thrive over the years to come.

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Boeing was trading at over a hundred dollars a share in early 2007 before the recession and the announcement of problems with delivering the aircraft on time. The stock dipped below forty dollars a share at when the market crashed and has been at seventy-five dollars a share as recently as two months ago. Today BA closed at $62.01 a share. Dividend stocks can be attractive for long term investing and Boeing fits the bill there as it has steadily paid dividends since the Second World War. Recent figures indicate that Boeing has orders from eighty-seven customers for over eight hundred aircraft. It expects to assemble ten a month at its Everett, Washington plant, another three a month at a new plant in North Charleston, South Carolina. The price tag for the delivered jet will run above or below two hundred million each depending upon design variations. Two hundred million times eight hundred comes to roughly one hundred and sixty billion US Dollars. Depending upon just how efficiently Boeing manages production of this airplane there could a lot of cash to pass out as dividends and reinvest in future endeavors. That comes to the point of whether or not it is a good idea to invest in Boeing at this time.

With efficiency in mind it is useful to know that Boeing is using a large number of subcontractors on this project. Subcontractors include Mitsubishi Heavy Industries, Alenia Aeronautica, Korea Aerospace Industries, Global Aeronautica, Kawasaki Heavy Industries, Spirit AeroSystems, Saab, Latécoère, TAL Manufacturing Solutions Limited, Messier-Dowty, and Hamilton Sundstrand. Subcontracted assembly parts will be made and tested by subcontractors and then shipped in specially refitted Boeing jets to facilities in the USA where assembly of an entire jet is expected to take only three days! There is always a risk in picking new winners in the stock market. Jump in too soon and you might lose money. Jump in too late and you miss the boat. In deciding whether to invest in Boeing investors will need to decide just how profitable this jet will be over the long term. As always we are not suggesting one invest in Boeing or that one ignore the stock. Rather see this as an exercise in stock evaluation.

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