This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Good Boeing, Bad Boeing

Stocks in this article: BA

SEATTLE ( TheStreet) -- It could be that Boeing (BA) is headed into a golden age, as demand grows from airlines and from international defense customers.

Wall Street has bought into this rosy view, pushing Boeing up 30% this year, making it the Dow's third-best performer. Analysts are estimating earnings of $1.05 a share when Boeing reports on Wednesday, which represents a sharp reversal from a loss of $2.22 a share a year earlier.


"Boeing at this point in its history is as well-positioned as I have ever seen it," said Davenport & Co. analyst Carter Leake. "It's a duopolist, with airplanes in short supply," Leake said. "I am looking out ten years and it looks damn good."

Yet the Boeing story also has a troubling side. Development of the 787 veered far off course. The true cost of this variance is not known and may never be known. Another new airplane, the 747-800 freighter, was also delayed, as resources were diverted to the 787. Delays accounted for the year-ago third quarter loss.

In an Oct. 1 report, Gleacher & Co. analyst Peter Arment sketched out the dichotomy within Boeing.

On the one hand, he said, "Boeing is incurring more costs on the 747-8 program" and "the 787 and 747-8 still have headline risks," he said. On the other hand, "program accounting benefits coupled with continued strong performance within the 737 and 777 platforms have partially offset the increase in costs."

In fact, Arment noted, "a higher number of 777 deliveries and continuing strong profit contributions from both the 777 and 737 programs" led him to increase his estimate to $1.06 a share. Other analysts also raised estimates, so that consensus has risen from 99 cents at the start of the month.

To extrapolate, good Boeing -- the 737 and the 777 -- profitably supports bad Boeing, the delay-wracked development programs for the 787 and the 747-800.

Meanwhile, despite anticipated declines in U.S. defense spending, Boeing Defense, Space and Security seems unlikely to suffer. Arment noted that "international orders are expected to boost the long-term outlook for defense," which accounts for about 50% of Boeing revenue, estimated to be about $65 billion in 2010.

For Boeing Commercial Aircraft, the bottom line is always its order book, equivalent to seven years of revenues. Most orders are for the 737, the best-selling airplane in history. Boeing has delivered 6,543 of them and has 2,127 outstanding orders. About 4,000 aircraft are currently in service, flown by airlines in 115 countries. At any given moment, 1,200 737s are in the air somewhere in the world.

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs