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Summary

  • Three months into the year, Boeing has been the worst-performing DOW stock, down 8.06% on the year.
  • Boeing has seen substantial revenue, profit and earnings growth over the past five years.
  • Boeing's future looks bright, with strong confidence from management shown through a recent dividend increase and a large share repurchase plan.

Overview

Recently, I wrote an article discussing Merck (NYSE:MRK), the Dow's best-performing stock so far this year. In this article, I will be discussing The Boeing Company (NYSE:BA). Boeing is a large aerospace and defense business made up of the following units: Boeing Commercial Airplanes; Boeing Defense, Space & Security; Engineering, Operations & Technology; Boeing Capital; and Boeing Shared Services Group. The company was founded in 1916, and is currently headquartered in Chicago, IL.

As of March 31st, Boeing has been the worst-performing Dow component, down 8.06% YTD. Boeing has seen the following price returns:

1-Year Price Return47.65%
3-Year Price Return71.46%

Looking at Boeing's current financials, trading activity, dividends, earnings, and future outlook, I feel that the company remains a solid long-term buy, even though it hasn't performed well over the first three months of the year.

Financials

Gross Profit Margin (Quarterly)14.28%
Profit Margin (Quarterly)5.18%
Return on Assets (TTM)5.00%
Return on Equity51.31%
Revenue86.62B
Quarterly Revenue Growth (YOY)6.65%

Looking at the chart below, you can see that Boeing's revenue and profit have fairly steadily increased over the past five years.

(click to enlarge)

BA Revenue (TTM) data by YCharts

Current Trading Activity and Valuation

Boeing closed Monday at $125.49, compared to its 52-week high of $144.57 and its 52-week low of $74.27. The stock is trading lower than its 50-day moving average of $134.83, but higher than its 200-day moving average of $124.03.

Boeing currently has a PE ratio of 21.23x and a price-to-book value of 6.40x. Looking at the chart below, you can see that while Boeing's PE ratio has fluctuated with several short-term spikes, its current value is well within its historical average.

(click to enlarge)

BA PE Ratio (TTM) data by YCharts

Earnings and Dividends

For its latest quarter, Boeing reported earnings per share of $1.88. This was 29 cents higher than estimates, and 60 cents higher than the same period last year. This continued Boeing's string of beating earnings estimates.

Period EndingEstimateReported
1/29/2014$1.59$1.88
10/23/2013$1.54$1.80
7/24/2013$1.58$1.67
4/24/2013$1.47$1.73
1/30/2013$1.19$1.28
10/24/2012$1.12$1.35
7/25/2012$1.11$1.27
4/25/2012$0.95$1.11
1/25/2012$1.02$1.31
10/26/2011$1.11$1.46

Looking at the chart below, you can see that Boeing has seen earnings increase by over 100% over the past five years.

(click to enlarge)

BA EPS Basic (TTM) data by YCharts

Boeing currently pays a quarterly dividend of $0.73 per share that yields 2.31%. The company's dividend has historically yielded between 1% and 3% at most times, while the dividend itself has continued to slowly increase. The latest increase from $0.485 per share to $0.73 per share is one of the highest increases ever for the company.

Company Outlook

Boeing's future looks bright, and the management of the company feels the same way. At the end of 2013, Boeing increased its dividend by 50% and authorized $10 billion for its share repurchase program.

In its latest orders received report, Boeing reported the following booked orders:

  • 183 orders for variations on its 737 regional airliner
  • 4 orders for its 777 airliner
  • 1 order for its 747 airliner
  • 1 order for its 787 airliner

After this report, it was announced that Japan's ANA Holdings has placed an order for 40 aircraft (an order worth $13 billion at list prices). And just today, it was reported that Boeing and Air Canada finalized an order for 61 737 MAX airplanes, an order valued at $6.5 billion (at list prices).

With several strong partnerships in place, and the company still continuing to grow its market, I believe that Boeing will reward long-term investors with significant returns in the coming years, as the company continues to increase production rates and utilize cost-efficiency methods to ensure maximum earnings returns on its growing revenues.

While I believe that both Boeing, the Dow's laggard so far on the year, and Merck, the Dow's leader so far on the year, are both solid buys for long-term investors. I believe that Boeing is the less risky and currently better-priced stock of the two. As always, I suggest individual investors perform their own research before making any investment decisions.

Source: Boeing: Is The Dow's YTD Laggard Worth Considering As A Long-Term Buy?