An Insider is Buying The Boeing Company (BA), But More Are Selling

Boeing’s peers include Lockheed Martin Corporation (NYSE:LMT), Raytheon Company (NYSE:RTN), Northrop Grumman Corporation (NYSE:NOC), and United Technologies Corporation (NYSE:UTX). In general, aerospace and defense companies are trading at low multiples as investors worry about the effects of cuts in U.S. military spending on their businesses. As a result Lockheed Martin Corporation (NYSE:LMT), Raytheon Company (NYSE:RTN), and Northrop Grumman Corporation (NYSE:NOC) all carry trailing P/Es in the 10-12 range. All three saw small decreases in revenue last quarter compared to the first quarter of 2012; Lockheed Martin and Raytheon managed to translate that into decent increases in earnings, but we’d imagine that these companies will not be able to sustain increased net income purely based on net margins. We would also note high dividend yields at these peers, with Lockheed Martin paying 4.6% at current prices. United Technologies Corporation (NYSE:UTX) – fueled by the effects of an acquisition- saw significantly more business. Sell-side forecasts have the forward P/E at 13, about even with Boeing.

The more defense-oriented companies seem somewhat interesting from a value (and, in some cases, income) perspective, though of course these stocks should be trading at low multiples given the political environment and we would have to stress test any impacts of lower federal spending. Boeing is a bit dependent on strong improvement in EPS this year for our liking, and between that, the not particularly strong Q1, and the large number of insider sales- none of which would be too concerning on their own- we would avoid the stock.

Disclosure: I own no shares of any stocks mentioned in this article.