COMPANY DESCRIPTION

Boeing is engaged in the design, development, manufacturing, sale and support of commercialjetliners, military aircraft, satellites, missile defense, and launch systems. Boeing has a strong positionin the global aerospace and defense industry.This strong position provides economies of scale andenhances the company’s brand image. However, intense competition across all business segmentsof Boeing could erode the market share of the company and could also affect its profit margins.

 

ECONOMIC MOAT

Boeing's economic moat is built on the relatively high barriers to entry imposed by the technical knowledge required to design, assemble, and certify commercial aircraft, furthered by its entrenched position in defense sales to the U.S. and other government customers.

 

OUTLOOK

The Boeing Company continues to perform well. The board recently increased the quarterly dividend payout by almost 25%, to $0.91. In addition, a new $12 billion share-repurchase plan was announced.  BA stock offers decent risk-adjusted three- to five-year returns, and has an above-average dividend yield.

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STRENGTHS

  • Strong market position enhance brandimage and competitive advantage

  • Robust focus on research and development(R&D) allows maintaining robust market position

  • Increasing operational performance helpsto fund future growth plan

WEAKNESSES

  • Higher dependence on the US governmentcontracts may adversely influence earnings

  • Larger dependence on subcontractors andsuppliers could increase operating cost andprofitability

  • Labor unions lead to work stoppages andproduction delay, affecting revenues

THREATS

  • Intense competition in the jet aircraft marketand the airline industry could erode marketshare and impact profit margins

  • Fixed-price contracts could subject Boeingto losses if it has cost overruns

  • Concentration of customer financingportfolio among certain customers could adversely impact earnings, cash flow andfinancial position

OPPORTUNITIES

  • Growing global aerospace and defensemarket would help to boost sales andrevenue

  • Increasing demand for commercial airplanescould provide topline growth

  • Backlogs and increasing customer ordersfor product deliveries would enhancerevenue and growth

The above report is for information purposes only, and is not a solicitation or offer to buy or sell any securities. Past performance is no guarantee of future performance. Neither diversification nor asset allocation ensures a profit or guarantees against loss. Before investing, investors should consider their risk tolerance, investment objectives, time horizon, available capital, and charges and expenses.  

 

The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.

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