The first half of 2014 was a weak time for durable goods orders, but then came July and, with it, a 22.6% increase in those orders for big-ticket items.
Aircraft orders got credit for much of the jump, and I have found no company that better illustrates that than Boeing Co (NYSE:BA), which had only a handful of orders for its biggest jets in the first half of the year, then witnessed a virtual explosion of more than 300 orders in July – most of which were for Boeing’s larger aircraft.
Boeing’s price per share is $126.80, down from its high of $138.10 in January of this year but still significantly higher than where Boeing stood more than five years ago, in March of 2009 ($33.49).
Boeing still seems to be struggling to find buyers for its 787 Dreamliner, a long-range, wide-body jet capable of carrying 210 to 335 passengers. Last month, two customers pulled out of deals for nine of the 10 early models of the jet.
- Warning! GuruFocus has detected 4 Warning Signs with BA. Click here to check it out.
- BA 15-Year Financial Data
- The intrinsic value of BA
- Peter Lynch Chart of BA
Boeing’s biggest problem is the Dreamliners that were built in 2009 and 2010; they have design flaws that render them incapable of flying as far as those that were built after – and they aren’t as fuel efficient. Boeing learned from those flaws, and the more recent models are capable of flying greater distances and are much more fuel efficient. They have also been more successful in the marketplace. Boeing is on pace to deliver more than 100 Dreamliners this year.
With a construction price of up to $242 million, those Dreamliners are much more expensive to build than the ones that followed, thanks to lower costs. Revenue for Boeing is higher than it has ever been, and so is net income.
Boeing’s P/E ratio is 19.1. Its P/S ratio is 1.1, and its P/B ratio is 6.5.