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THE BOEING COMPANY (NASDAQ)

Is there a bigger bet on the American Economy than a company who powers America’s defense force, jets, space exploration, etc? Nearly every advanced warfighting plane is manufactured by Boeing. Below is a list (Source, Boeing Defence website) showing all the major airforce items supplied by Boeing.

You say, but didn’t the 737MAX entire fleet gets grounded. The answer is yes, but who else does the world’s aviation industry have to supply them with? Airbus, From the 2019 annual report Boeing mentions and commits to the following.

We will never forget the 346 lives lost in the 737 MAX tragedies. They have changed us and our industry forever. We’re humbly learning from the accidents and are committed to using what we learn to improve safety and quality, because all who rely on our products and services deserve our best.

Nothing is more important to us than safety. We are determined to restore the trust we lost in 2019. We’ll do it one aeroplane, one flight, one customer at a time.

Has the Trust been Lost?

Yes a little bit of trust has been lost, but Boeing is one of the best companies in the world and if Boeing cannot improve their safety, it is highly doubted that many other companies have the skill or expertise required to produce high-quality airliners to the size and scale of Boeing. To confirm this is a largely small industry dominated by Boeing and Airbus. I mean look fuck if Airforce One is built by Boeing who the fuck else is going to be given that opportunity in the future. I for sure know that the Pentagon won’t be trusting many other companies with the security of the president than an American owned America first company.


Company Financial:

Oh shit look at that -636m dollar loss in 2019 you will say. This has been one of the worst years and will be one of the worst years for Boeing to come. Plagued with the outflows of the 737MAX crisis and now the CORONAVIRUS Pandemic it has suffered a double whammy. We expect FY2020 to be largely flat if not declining before seeing a return to profitability in FY2021. 

From the Quarterly report on April 29th, 2020. 

Yes, this is not ideal, however, see below the commentary provided by Boeing. 

What About the Commercial Sector?

Commercial Airplane’s first-quarter revenue was $6.2 billion reflecting lower deliveries driven by the 737 MAX grounding as well as impacts of COVID-19 (Table 4). First-quarter operating margin decreased to (33.3) percent due to lower delivery volume, $797 million of abnormal production costs from the temporary suspension of 737 MAX production, a $336 million charge related to 737 Next Generation frame fitting component (pickle fork) repair costs, lower 787 margins primarily due to COVID-19, and $137 million of abnormal production costs from the temporary suspension of Puget Sound operations in response to COVID-19.

What about the defense segment:

Revenues from the defense sector are largely unchanged, however, note the much lower than expected earnings from the sector. This makes us think that the company is getting all the bad shit out of the way this reporting season leading into FY2021. 

What Is Shown In the quarterly report 

Defense, Space & Security first-quarter revenue decreased to $6.0 billion primarily driven by a charge on the KC-46A Tanker (Table 5). First-quarter operating margin decreased to (3.2) percent primarily due to a pre-tax charge of $827 million for the KC-46A Tanker, of which $551 million was driven by costs associated with the agreement signed in April with the U.S. Air Force to develop and integrate a new Remote Vision System, while the remaining costs reflect productivity inefficiencies and COVID-19 related factory disruption. A number of other programs were also impacted by COVID-19, further reducing margin in the quarter.

During the quarter, Defense, Space & Security received an award for 18 P-8A Poseidon maritime patrol aircraft, as well as a contract to develop an SB>1 DEFIANT™ prototype for the U.S. Army’s Future Long-Range Assault Aircraft program. Defense, Space & Security also completed the System Design Review for MQ-25.

Backlog at Defense, Space & Security was $64 billion, of which 28 percent represents orders from customers outside the U.S.

Boeing also provided a nice summary of all this data.

In summary, we expect this will continue to be affected by the COVID19 issues, however, with these fastly fading we will quickly forget about COVID, and life will resume as normal. 

In summary, this has happened before. This will happen again. But now would be a good time. Furthermore, it is worth noting that EPS has also been increasing due to large share buybacks that have occurred. 

We believe Boeing will be a top-performing stock over the next 3 years.


Prophet Invest is making a Big bet on BOEING.

10k of BOEING at $130/share.


We are not qualified investment professionals and cannot give specific investment advice. This information is opinion only. It is not intended as financial advice. Prophet is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information contained in this article.  Please do your own research. Some information may be out-of-date or inaccurate. 

-This is opinion only. This is not investment advice-

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