Is The Boeing Company (BA) More Attractive Than Its Peers?

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The Boeing Company (NYSE:BA) has been a steady winner for decades. And despite recent safety issues related to lithium batteries on its 787 Dreamliner, Boeing’s stock has still risen 36.70% over the past year, eclipsing peers such as Lockheed Martin Corporation (NYSE:LMT) and

Northrop Grumman Corporation (NYSE:NOC). Why is that the case? And is there a much bigger threat to Boeing’s long-term potential?

Boeing vs. Airbus

The Boeing Company (NYSE:BA)

The Boeing Company (NYSE:BA)’s biggest competitor is Airbus. These two companies have been duking it out for years, and the rivalry will only intensify going forward. Boeing has the 787 Dreamliner, and Airbus has the A350 XWB. Both are attractive because of their fuel efficiency. However, the A350 XWB is 6% more fuel efficient than the 787 Dreamliner.

Airbus doesn’t want to immediately make the switch to lithium batteries, due to recent negative press and safety concerns. However, rumors suggest that the company does wants to make that switch in the future.

According to Boeing Commercial Airplanes CEO Ray Conner, The Boeing Company (NYSE:BA) accomplished three years of work in just three months after the lithium battery incidents, with no slowdown in other production efforts. This hungry attitude demonstrates what Boeing is capable of with its back against the wall.

Furthermore, The Boeing Company (NYSE:BA) has a counterpunch to Airbus with its 787-10X. This expanded Dreamliner will have more seats, letting carriers increase passengers — and profits — per flight. Singapore Airlines, British Airways, and Air Lease Corp have already expressed interest in the new model.

Cost also plays a role when it comes to demand. A 787 Dreamliner costs as little as $206 million, whereas a A350 XWB starts at $254 million. This is important considering the current economic environment. Potential buyers are likely looking to cut costs in every way possible.

All factors considered, this doesn’t come down to one company defeating the other. The truth is that both are well-run companies with bright futures. The biggest threat for these companies isn’t each other, but the weak global economy.

Boeing vs. Lockheed Martin and Northrop Grumman

Lockheed Martin Corporation (NYSE:LMT) and Northrop Grumman Corporation (NYSE:NOC) are going to be more affected by shrinking government budgets than The Boeing Company (NYSE:BA), because they get more of their money from defense contracts. Boeing has an enormous backlog for aircraft, much of which comes from China, and replacement demand in developed markets is high.

The chart below shows how close all three companies are when it comes to valuation and efficiency. However, one company falls short when it comes to dividend yield.

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