The Boeing Company (BA): Value for Money?

Page 1 of 2

Most economies around the globe are recovering, which in turn has bolstered air travel. As a result, airlines are reporting record load factors, and some countries are witnessing double digit growth for air travel. This suggests that commercial airliners would be looking to expand their fleets, which presents a bullish case for airline manufacturers.

Moreover, there has been a spike in defense contracts, and gauging from China’s aggressive military advancements, I think that trend is set to continue. This spells good news for The Boeing Company (NYSE:BA). On a global basis, Boeing is the largest manufacturer of commercial airliners (by volume), and the second-largest defense contractor, only behind Lockheed Martin Corporation (NYSE:LMT).

The Boeing Company (NYSE:BA)Defense contracts

Rising Middle East tensions, and the ever-tense relationships of India with China and Pakistan, have caused a surge in defense contracts. Lockheed Martin reported record backlog of $82 billion, even though its net income plunged by 16.7%. International defense contracts for The Boeing Company (NYSE:BA) amounted to 24% of its revenues, and in 2012, its defense order backlog surged by 41%.

Since Lockheed Martin derives more than 80% of its revenue from domestic markets, proposed cuts to the US defense budget greatly limit its growth potential. But since Boeing is rapidly capturing international defense space, and its commercial segment is setting records, I think that altogether, this somewhat hedges the risks presented by US defence budget cuts.

Commercial jets

2012 was a record year for The Boeing Company (NYSE:BA). It reclaimed the top spot of the largest commercial airplane manufacturer (by volume), and delivered 601 airplanes, its highest output since 1999, and the second highest in commercial aviation history. Its order backlog of commercial airplanes stands at a record $319 billion, and management remains optimistic about its future prospects. Boeing made a smart move by siphoning off its earnings from defense contracts into the development of its ambitious Dreamliner project. As a result, its new orders in commercial space spiked by 49%, while Airbus reported a 41% plunge in new orders.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 44 percentage points in 21 months Learn how!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!