Boeing · Company Review Thursday

Company Review Thursday: The Boeing Company

The Boeing Company was the first company I spent more than $90/share for back in 2013. I was so excited because it would be the second time I had a significant amount of money to drop in to the stock market and I could choose anything I wanted. From 2011 to 2014, I was constantly in the air. I accumulated so many miles jet-setting across the US and overseas in Europe, I could probably fund a free flight some where on the west coast. But in 2013, I realized the airline carriers weren’t the one’s producing these airplanes. It was companies like Boeing that make billion dollar sales every year to airlines and military institutions across the globe. I’ve held on to the stock since then largely because they are the leaders in the aerospace and defense products space, so I’ve seen the price hit its highest point at about $158/share and come all the way back down to where it is now. I have faith the stock price will return to those highs in the future and here is why:

Company Snapshot Yahoo! Finance Data)
Name:  The Boeing Company (as of close of business 2/25/2016)
Ticker: BA
Current Price: $116.82
52 Week High Price:$102.10
52 Week Low Price: $156.91
Market Capitalization: $96.11B (Large Capital)
Price/Earnings (P/E Ratio): 15.70
Earnings/Share (EPS): $7.44
Dividend: $4.36/year (3.77% yield)
Industry: Industrial Goods
Primary Business: Aerospace/Defense Products & Service

 

The Good

It’s really tough to break out the good, bad and ugly for Boeing because everything kind of blends together here. In 2015, Boeing registered a 68.16% return on equity. This number indicates how well they utilize investors money, and I like what I see. Plus Boeing being the largest by revenue generated in its industry its hard to say no to owning a piece of the best. Especially with that $4.36/share dividend every year coming in

The Bad

Boeing carries a higher than industry average percent debt to capital ratio. I’m not going to say this has worked out terribly for them, but add a $30 million drop in earnings from operations and a tax rate of 27.7% in 2015, a significant increase in the treasury stock (otherwise known as the stock the company holds of itself) and increasing your dividend in the same year looks pretty ugly on the balance sheet. But I don’t think this concerns me a lot. Building plans/manufacturing anything you will need to pay for your supplies, and generally that is done through credit on a long term basis so it seems natural for the company to have debt.

The Ugly

The foreign exchange rate fluctuations have not been kind to Boeing. In fact, the strong dollar abroad actually benefits the competition because a significant amount of Boeing’s business comes from abroad, where other companies stay a little closer to home.

In general Boeing is at most a slight buy…the price I’m sure will go up, but how much and when is still a question as with everything. Also if you’re not looking to spend more than $100/share, this stock is not for you. I don’t necessarily see Boeing’s price coming below $100 this year, but as we’ve all seen this year, anything can happen. If you have Boeing, I’d definitely say hold it. Don’t give up on it just yet…the dividends are too precious to let go of in a down market.

Until next post folks.

*Nothing in this post is any type of advice. Just giving my perspective on this company*

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