Boeing - Seeking Alpha Beyond The Current Turbulence

Aug.22.11 | About: The Boeing (BA)

The Boeing Company (NYSE:BA) shares are currently trading at a significant discount that does not appear warranted even given the current bearish view of the market. It is a key market leader amongst aviation manufacturers, and a slowdown in commercial sales in a bear market is not necessarily a holistic view of its overall business model. Its quite significant multi-project military program will always continue to drive cash flow for the company, as military capability projects come with two defined cash flow streams; acquisition (purchase of the platform and initial spares), and ongoing integrated logistic through life support (maintenance, spares and capability enhancements or upgrades). Military projects are generally longer in nature than commercial programs; especially in aviation where programs may run between 15 to 30 years. To see the depth of programs Boeing is working on go to its website and scroll through the depth of current programs in progress.

With this in mind look at the financials of Boeing, firstly at here and here, where you can read the latest financial presentation from the CEO and CFO management team. In current market conditions the company is trading at a significant discount that is disproportionate to the recent market fear selling, at $57.54 per share or a discount of 27.90% from ts 52-week high (and approx 8% below its five day high). Given it pays a consistent dividend, has a strong financial surplus, has consistent cash flow from government contracts, and is trading at a PE ratio of 12.20, it currently offers a potential above average return to short- to mid-term position traders.

Looking at Boeing though with a bullish mindset to its historic highs, it may be some time before it returns to anywhere near these (mid 2007) levels. However for the longer-term trader or investor looking to provide a solid blue chip to a portfolio, Boeing should be given serious consideration. While a large portion of projects and sales come from government military funding, the current global security environment should not affect these programs. Any potential scale back in commitments in the Middle East in the coming years will be a minor blip to military programs. As stated already, these programs span considerable time periods, and continue whether the military is at war or not; the military's requirement to always be ready will ensure that Boeing always has a reliable cash cow to bank on.

And in breaking news, Boeing gains approval for its biggest jumbo ever to fly.

This advice is general in nature only and investors should seek independant advice before making any investments of their own.


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.