One of the larger orders for The Boeing Company (NYSE:BA) so far is the purchase of 175 737 planes, which was just approved by the shareholders of Ryanair Holdings plc (ADR) (NASDAQ:RYAAY) in a deal worth some $15.6 billion. The low-cost carrier recently reported record profits, income and revenue both rising 13%, with the stock up nearly 45% this year alone. The airline is looking to significantly expand its operations from Dublin, especially to Scandinavia, with which it hopes to increase traffic by around 25%. Presumably, the purchase is meant in part to support these expansion plans.
Valuations and metrics
Looking at P/E ratio, Boeing is clearly the less expensive of the two aircraft makers discussed here, trading at 19.12 times trailing earnings versus EADS’ 27.01. The price-to-book paints quite a different picture however, with The Boeing Company (NYSE:BA)’s 10.35 far higher than EADS’ 3.86. As mentioned earlier, the Airbus division is planning on upping its operating margin, currently at only 4%, to compete with Boeing’s 7.37%. Boeing furthermore has an excellent return on equity of over 64%, much higher than EADS’ 13.66%.
The bottom line
The Paris Air Show is a closely watched event for investors in aircraft companies, an event where the latest models are showcased and large deals are announced. So far, it seems as if Airbus is acquiring the bulk of the deals in its home turf, and at least for the moment, seems to be the company delivering the better growth. On the other hand, The Boeing Company (NYSE:BA) is valued a bit more attractively at the moment, which may make it the more compelling choice for value investors.
Daniel James has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
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