The Boeing Company (NYSE: BA) has failed to skyrocket at the NYSE despite sumptuous achievement in the last twelve months. The company looks set for an incredible 2013, but it remains to be seen as to whether or not, its books-based achievements can be reflected on the stock price. The company has also been struck by disasters in the recent past and the U.S FAA has opened a review of the 787 model.
The Company recently reported a milestone sales achievement of more than 600 units. It delivered 415 units of the 737 family and 83 units of 777. Additionally, Boeing sold 103 units in three other models, that is, the 787(46), 747(31), and 767 (26), making it 601 commercial airplane sales for the year. Consequently, the sales beat the company’s initial guidance of 585 to 600 units for the FY12. The 601 deliveries were the company’s highest since 1999 and represent 26 percent increase year-over-year. Boeing benefited from tremendous orders from Lion Air, United Airlines and Norwegian Airlines.
Nonetheless, the most impressive of statistics was the company’s number of unfilled orders by year-end totaling to a historical 4,373 whereby, 1,203 of these were net commercial airplane orders for the year. The company’s second-highest achievement. France-based Airbus year-to-date, has delivered 516 airplanes, lower than Boeing’s delivery sheet.
In other News, Boeing revealed that the 737 model hit record orders in 2012 after the company received 1,124 net orders including 914 orders for the new-engine variant of the popular single-aisle aircraft, the 737 MAX. The fuel efficient MAX also hit 1000 orders on January 2. If this trend continues, then there is no doubt that Boeing would be blowing the records books in 2013. However, the cloud of doubt will be upon the company’s stock performance as has been the case in the last twelve months.
Bob Feldmann, vice president for the jet program was quoted saying, “reaching 1,000 orders in just over a year’s time from our first order shows the aircraft’s value for customers. [They] are expressing confidence in our ability to deliver improved performance on schedule.”
Boeing Company operates in an industry of few players. The industry is influenced by several factors including jet fuel prices and weather conditions, besides other economic and business factors. Additionally, disasters do strike thereby, affecting the company’s stock performance accordingly. For instance, the battery fire that occured in Boeing 787 aircraft on Monday 7, which sent the stock plunging 1.94 percent.
Boeing has a 12-months forward annual dividend yield of 2.50 percent, which is below that of U.S based rival Northrop Grumman (NYSE: NOC) of 3.20 percent. However, it is Lockheed Martin (NYSE: LMT) that tramps the two companies with forward annual dividend yield of 4.90 percent. If this were the only factor to consider before buying a stock, then it would be obvious why Boeing’s recent achievements seem to remain on books alone.
However, a look at the percentage of shares short as of December 14, 2012 gives a decidedly different picture. Boeing short ratio is lowest at only 1.5 percent as compared to Lockheed Martin whereby, 3.5 percent of its traded stock attracted short positions from investors while Northrop Grumman had 4.4 percent of its stock short for the same period. In terms of risk factor, both Boeing and Northrop Grumman have more than a direct relationship with market risk with a beta of 1.02 and 1.09 times respectively while Lockheed Martin has a beta of 0.65.
Profit margins are nearly at par among the three companies despite the massive revenues reported by Boeing. Northrop Grumman and Lockheed Martin have 7.89 percent and 6.05 percent profit margins, respectively while Boeing has a profit margin of 5.47 percent for the trailing 12-months. Boeing’s most recent quarter revenues grew by 12.90, percent while Northrop Grumman and Lockheed Martin’s revenues fell by 5.20 percent and 2.10 percent respectively.
If there is any company doing better than the rest among the three, then Boeing must be on top of the list. So, whether or not it is about investor sentiment, it remains to be seen. But Boeing’s fundamentals look outstanding and still boast 22 Buy ratings from analysts, with 12 of those being Strong Buy recommendations. The mean price target stands at 486 per share, with some analysts putting a target of $100. The company has also received additional US Navy order for Torpedo Defense Systems.