Many are asking is it a good time to buy Boeing (NYSE: BA) stock because of classic value investing theory. In fact, a key lesson in Value Investing 101 is buy a good company when it has problems.
Boeing is having problems because its 737 Max airliners are crashing. For instance, American Airlines is canceling 90 flights a day because they grounded its 737 Maxes, Bloomberg reports. In addition, every country in the world is grounding the 737 Max because of software problems.
However, the 737 Max is just one of seven models of airliners Boeing manufactures. Moreover, thousands of Boeing airliners are flying all over the world without crashing.
Finally, Boeing makes far than airliners. For example, Boeing manufactures warplanes, helicopters, drones, cargo planes, and a variety of weapons for the world’s armed forces. Beyond that, Boeing builds rockets, space capsules, and probes for NASA and private industry.
Is Boeing Making Money?
Thus, the 737 Max is just part of Boeing’s business. Hence, the company can survive and make money without the 737 Max. Therefore, it is a good time to ask if Boeing is making money?
The answer the latest financial numbers provide is yes. For instance, Boeing reports a gross profit of $6.251 billion on revenues of $28.341 billion for 4th Quarter 2018.
In addition, Boeing records an operating income of $4.176 billion and a net income of $3.424 billion for 4th Quarter 2018. Beyond that, Boeing records an operating cash flow of $2.947 billion and a free cash flow of $2.455 billion for 4th Quarter 2018.
Hence, Boeing is making money and has the resources to survive the 737 Max debacle. For instance, Boeing had $7.637 billion in cash and equivalents and $927 million in short-term investments on 31 December 2018. Consequently, Boeing had $8.654 billion in in the bank at the end of 2018.
Boeing will survive the 737 Max problems
Therefore, Boeing has enough money to pay lawsuits and fix its planes. In particular, Boeing could fix the safety problems on the 737 Max with simple upgrades to computer systems, Vox claims.
For instance, Boeing can rename the 737 Max, and keep selling it with the safety upgrades. Under these circumstances, the crashes are hardly the catastrophe for Boeing that hysterical journalists portray them as.
Strangely, the crashes could make Boeing a better and more profitable company by forcing it to make safety features mandatory. Thus, Boeing could make more money by selling safer airliners.
Additionally, the crashes could lead to a management shakeup which can also make Boeing a better company. Hence, crises can make good companies stronger and more profitable in the long run.
Boeing is a superb dividend stock
Boeing (NYSE: BA) is hardly a value investment right now because its share price was high at $370.46 on 26 March 2019.
However, Boeing is a superb dividend that stock paid investors $2.055 a share on 1 March 2018. Moreover, that dividend grew by 34.5₵ between December 2018 and March 2019.
In fact, Boeing paid a $1.71 dividend in December 2018, and a $1.42 dividend in December 2017. Hence, Boeing’s dividend grew by 63.5₵ in a little over a year.
Impressively, Boeing investors enjoyed seven years of dividend growth, an annualized payout of $8.22, a dividend yield of 2.22%, and a payout ratio of 56.3% on 26 March 2019. Conclusively, Boeing is a superb dividend stock despite the high share price.
Should you buy Boeing Stock now?
Boeing is a good stock to look at right now but its operations raise serious questions. In particular, Boeing’s ethics are troubling.
Disturbingly, several hundred people died in the two 737 Max crashes this year. Crashes that a simple safety upgrade might have prevented.
In addition, Boeing manufactures warplanes, helicopters, missiles, and drones for the military. Some of those aircraft are being used in military operations, including attacks on civilian targets now.
Boeing is a Good Dividend stock
Under these circumstances, Boeing is not a stock for people who dislike ethically questionable companies. However, it is a superb dividend stock that is going through a rough stretch.
On the other hand, investors looking for a good dividend stock in a solid company might like Boeing. Despite its problems Boeing is making money and paying a good dividend.
My advice for investors is to investigate Boeing but understand what you are getting yourself into. Boeing is a good company with serious problems that could be a good investment for some people.