The Boeing Company (NYSE:BA) is the world’s foremost aerospace company and the biggest manufacturer of commercial jetliners and military aircrafts. The different divisions in the company are: Commercial Airplanes, Boeing Defense, Space & Security (BDS), and Boeing Capital Corporation, which provides financial solutions, facilitating the sale and delivery of Boeing commercial and military aircraft, satellites, and launch vehicles. BA was launched in Chicago, Illinois. Boeing, the American titan, has been dominating the aerospace industry since 1916. With its strong focus on diversification, BA has been a basis of steady earnings for investors.
Encouraging Financials
Boeing Commercial Airplanes third quarter revenue was recorded at $12.2 billion, up 28% from the same quarter last year, indicating the planned and successfully executed enhancement in airplane deliveries. Commercial Airplanes operating margin was sturdy at 9.5%, reflecting solid core operating performance across the business, counterbalanced by the premeditated margin dilution of increased 787 and 747-8 deliveries.
Boeing Defense, Space & Security posted third quarter revenue of $7.8 billion, declined 4% from last year due to lower volume and delivery mix. Operating margins were 10.5%, again reflecting solid core performance.
Boeing Military Aircraft revenue was down by $3.8 billion driven by fewer deliveries on AEW&C and C-17. Operating margins increased to 11.7%, again indicating strong performance across numerous programs.
Network and Space programs revenue of $2 billion was down as compared to last year, caused by planned lower volumes linked with the Brigade Combat Team Modernization program. The activity on this program is in the final stages of completion.
The Boeing Company (NYSE:BA) Capital produced $33 million in operating earnings during the quarter, and the portfolio balance remains stable at $4.1 billion. During the quarter, other segment expenses stood at $74 million, lower than the previous period due to a gain in 2011 from the reduction in allowance for losses related to financing receivables.
Return’s Assured
Boeing has affirmed a buyback of 4% of its market cap (shares worth $2 billion) in 2013. This buyback can pave the way to a noteworthy increase in returns for shareholders in the coming quarters.
Secondly, BA has confirmed a dividend of $0.485 for this quarter. This is 10% higher than its previous dividend of $0.44. The high dividend could be the indicator of company’s strong operational performance in this quarter.
Future Growth Secured
The Boeing Company (NYSE:BA) announced the growth of a highly developed method to test wireless signals in airplane cabins, making it potential for passengers to enjoy more steadfast connectivity when using networked personal electronic devices in the air.
The Boeing Company (NYSE:BA) concluded sales of the first 777 to the Republic of Iraq. The Republic of Iraq also has 30 Next-Generation 737s on order, the first of which are programmed for delivery in mid-2013, as well as 10 787 Dreamliners.
BA anticipated the world’s airlines should perceive logical liquidity and pricing for new-aircraft delivery financing in 2013. The manufacturer has estimated total industry jetliner deliveries at $104 billion in 2013, with 95 percent of that expected to be split between Boeing and Airbus
Order Book- Filled
The company signed a new 5 year contract worth $56 million that has set Boeing expanding into aircrew maintenance and training devices for militaries across the globe. The new contract with the US Navy is for P-3C, EP-3, P-8A, EA-6B, EA-18G and SH-60B training devices stationed at Marine Corps Air Station Kaneohe Bay, Naval Air Station (NAS) Jacksonville, Fla.; Hawaii; NAS Whidbey Island, Wash., and Kadena Air Base, Japan.
Boeing has a more than full order book, and has broken the yearly order record on December 5, 2012 with the delivery of 377th NexGen 737, which surpassed the previous 2010 record of 376 deliveries. Total orders for 737 airplanes (Next generation and Max) for the year has surpassed 1,000 (1.031 to be exact, something never accomplished before).
Boeing-Airbus & Dreamliner
Airbus has been ahead of Boeing in commercial aircraft, since 2002. Airbus had been able to maintain its lead with new planes, while Boeing has struggled with the delay of its highly anticipated 787 Dreamliner multiple times. Despite having the most successful unveiling, in terms of order numbers, Boeing has been stuck as the Dreamliner is only finally starting to ship against the planned launch in 2008. Now with the 787 Dreamliner in production and Airbus not coming out with a major new model until 2015, Boeing is poised to take back a healthy chunk of market share from its only real competitor.
Cost- A serious concern
Analyzing from the operational perspective, cost turns out to be a major concern behind lower profitability of Boeing Aircraft as compared to its Competitors. The gross margin of the company contracted by 5% mainly due to cost issues. Although the entire aviation industry is under the grip of high cost issues, Boeing is higher than most of its competitors
Better return to shareholders has mainly occurred due to greater reliance on Debt. The aircraft manufacturer needs to work on its cost in order to boost profitability.
Conclusion
The company has excellent growth prospects ahead. The future isn’t what it used to be for The Boeing Company (NYSE:BA). It’s better — better than at any other time in the company’s history, thanks to an eight-year campaign by Chairman, & CEO Jim McNerney to heal the splintered operation into a truly incorporated enterprise. The dividend has been on the rise during the last five years. The decision to cut down defense jobs has sent a bullish signal to the market. The share buyback and higher dividend seem to be a positive indication for the company and we remain bullish over the stock. However, most of the growth hinges upon the ramp-up in production, as planned by Boeing.
