The Boeing Co. (NYSE: BA) once again last week solidified its position as the best-performing stock among the 30 equities included in the Dow Jones Industrial Average (DJIA). The stock added about 1.3% to its yearly gain last week and now posts a year-to-date gain of 36.27%.
Three other Dow stocks have posted year-to-date gains of more than 20%: Apple Inc. (NASDAQ: AAPL) is up 29.74%; Visa Inc. (NYSE: V) is up 27.66%; and McDonald’s Corp. (NYSE: MCD) is up 26.45%.
Boeing is scheduled to release second-quarter earnings on Wednesday and analysts are looking for EPS of $2.31 on revenues of $23.07 billion. In the second quarter of last year the company posted a net loss of $0.44 per share on sales of $24.75 billion. In that quarter the company wrote down about $2 billion in charges to three of its big programs: the KC-46A U.S. Air Force tanker program; the 787 Dreamliner; and the 747-8F.
Boeing stocked up its backlog with orders at the Paris Air Show for its newly launched 737-10. That boosted the stock in the second half of June.
But there are some chinks in the company’s armor. Deferred production costs on the 787 program still exceed $30 billion. Given Boeing’s accounting system, the company has to reduce that to zero when it sells 1,300 Dreamliners. Through June the company has delivered 565. That means that Boeing’s margin on each remaining 787 it sells needs to average around $41 million. The 787-9, the company’s best-selling model, has a list price of $270.4 million and an actual sales price of 30% to 40% less than that. Can the numbers work?
Boeing’s 777 also took a hit this past week when Lufthansa lopped off 14 777Xs from its original order total of 34. The company’s biggest customer for the 777X is Emirates, which has ordered 150 of the planes but is currently struggling with falling profits and empty seats.
Boeing stock closed at $212.14 on Friday in a 52-week range of $126.31 to $212.20, and the high was posted Friday. The 12-month consensus price target is $202.18.