It has a robust dividend history with current dividend yield of about 4.23%. However, its price to book value ratio is at a stunning 114 as compared to Boeing’s 21. There are no serious concerns around its business prospects, but such a high P/B ratio indicates that the market can greet it with a correction.
United Technologies Corporation (NYSE:UTX), which produces aircraft systems that control essential functionalities, reported a strong first quarter in 2013. Its earnings were up by 6% to $1.39 per share. A better than expected growth in the Climate, Controls and Security business helped achieve earnings that exceeded management’s expectation.
Like Lockheed Martin Corporation (NYSE:LMT), this company has also been generous in paying dividends as it recently announced a quarterly dividend of $0.535 per share. Besides the dividend, it has also created shareholder value via reasonable capital appreciation. Its stock has gained around 30% in just a year.
Final words
The last time I wrote about Boeing, it had rallied approximately 30% with almost a month left before its first quarter earnings. A robust first quarter wherein it reported a growth of 24% in core earnings per share to $1.73 per share helped the price to rally further to current levels.
The decision to increase production rates proved effective for the company as it delivered 169 commercial jets in the second quarter. Technically, as well, Boeing is a robust company that has a strong financials. Being a heavy manufacturing company, it has done a commendable job in keeping down its D/E ratio to around 1.3, thereby reducing the cost of debt servicing.
While Boeing has successfully maintained a stable dividend per share, its dividend yield number has been on a continuous decline because of increasing share price. However, it goes without saying that it has made up quite nicely for it via massive increase in the share price.
Boeing is a fundamentally and technically strong company. Though, there was a brief rough patch, it has managed to get back on track in time. Demand in the commercial airline industry is growing gradually and being the colossus that Boeing is, there is a lot to be gained from investing in this stock.
Mihir Mehta has no position in any stocks mentioned. The Motley Fool owns shares of Lockheed Martin.
The article Allow This Stock to Take Your Portfolio to New Heights II originally appeared on Fool.com and is written by Mihir Mehta.
Mihir is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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