"On Wednesday, the International Association of Machinists approved a new contract with Boeing in which the company agreed to make its 737 Max jet with union labor in Washington state. Yesterday, after getting the machinist all-clear, the National Labor Relations Board (NLRB) dropped its lawsuit against Boeing's investment in South Carolina," writes WSJonline.com in The NLRB's Boeing Sham.
"The NLRB is supposed to be a fair-minded referee in labor disputes, making sure neither side breaks the law. But the board put its fist squarely on the union side to make Boeing pay a price for moving one of its 787 assembly lines to a right-to-work state, to make sure Boeing never did that again, and to demonstrate to any other unionized company that its investment is at risk if it makes the same decision."
If you haven't been following this government-union-management interaction, or Gibson Guitar, or Solyndra, or myriad other cases which show beyond a shadow of a doubt that our government is run by thugs and thieves, start with the referenced WSJ article.
But we're here to look at investments, and The Boeing Company (BA, $71.93) is #36 on the Fortune 500 list with $64 billion in annual revenues. Boeing is a competitive manufacturer in the aerospace and defense industry. Boeing is finishing out a calendar year with flat earnings per share (EPS) of approximately $4.46 per share. Wall Street estimates show Boeing's EPS are projected to grow 9% and 17% for fiscal years 2012 and 2013.
Boeing's 2012 price earnings ratio (PE) is 14.5 and the dividend of $1.68 per share provides a current yield of 2.34%. Boeing's long-term debt to capitalization ratio has averaged 92.86% over the last three years, per a 12/10/11 Standard & Poor's Research report.
During the recent decade, Boeing's stock rose from a low of $24 just before the second Gulf War to a high of $107, then fell back down to $29 with the 2008 Financial Meltdown. The stock began a price recovery in late 2008, and has spent the last two years trading between $57 - $80. The stock could easily retrace its recent high of $80 with the next bull run in the market, where it will likely meet with some resistance.
Although Boeing is a large, industry-dominant, consistently profitable company, its annual revenue and earnings figures are all over the map. "Over the 10 years through 2010, sales grew at a compound annual rate (CAGR) of 2.3%, earnings from continuing operations grew at a CAGR of 4.5%, EPS at 6.2%..., " reports Standard & Poor's Research. Combine those lackluster numbers with Boeing's very high long-term debt levels and its degree of volatility during down markets, and we see a successful giant of a corporation lacking any profound reason for investors to buy its stock.
If I owned Boeing stock, I'd put in a sell order at $80. Whether you are a trader, growth investor, value or growth & income investor, there are better stock opportunities elsewhere in the U.S. stock markets. To keep apprised of stock research and investment opportunities, visit www.GoodfellowLLC.com and use the one-month free trial subscription offer to access the research.
Readers should consult their investment and tax advisors to determine suitability, risk and taxation.
New Time 11:20 AM PT: Get the Market Movements in Advance: William's Edge Webinar for Tuesday April 22nd, 2014 | John Ransom