Boeing Investors on Trump: Gauging the Reaction to High Defense Spending Plans
Since the Trump administration announced its new budget proposal, Boeing (BA) stock has risen 1.1%, closing at $179.4 on March 20, 2017.
Of the 25 analysts tracking Boeing (BA), four (16%) have issued a “strong buy” recommendation on the stock, while seven (28%) have issued a “buy.”
Boeing (BA) is expected to be one of the largest beneficiaries of Trump’s proposed increased military spending.
The Defense Department, Department of Homeland Security, and Department of Veterans Affairs would be the clear winners in Trump’s proposed budget plan.
President Trump’s first budget calls for a massive increase in the country’s military spending.
The Institute for Supply Management’s manufacturing PMI (or purchasing manager’s index) rose from 56 in January 2017 to 57.7 in February.
In June 2015, General Electric (GE) negotiated new four-year collective bargaining agreements with most of its US unions.
General Electric’s (GE) projected benefit obligation (or PBO) calculation takes into account the average years of service, salary growth, and the discount rate.
Under a defined contribution plan, the employer contributes a fixed amount to the fund on behalf of the employee.
General Electric’s (GE) total projected benefit obligations stood at $71.5 billion on December 31, 2016, compared with $68.7 billion on December 31, 2015.
The market expects Boeing’s (BA) EBITDA to rise 47.7% in 2017, given its expected margin expansion.
Boeing (BA) has been a consistent dividend payer for more than two decades. In 4Q16, BA paid a total of $672 million in dividends.
Analysts expect Boeing (BA) 1Q17 sales to fall 3.4% to $21.9 billion, and they expect its 2Q17 sales to fall 6.5% to $23 billion.
In 2016, Boeing’s (BA) Defense segment or BDS revenues fell 3% YoY (year-over-year) to $29.5 billion, as compared to $30.4 billion in 2015.
Although rising demand has been good for Boeing (BA), it has meant increasing capacity to cater to this demand, which BA did by raising more debt.
Boeing (BA) recorded $94.6 billion in revenues for 2016—a 2% YoY fall, mainly on the back of lower commercial airplane deliveries in the year.
In fiscal 2016, Boeing delivered 748 aircraft, which is 1.8% lower than the 762 aircraft it delivered in 2015 and helps explain its revenue decline.
Boeing (BA) reported 4Q16 revenue of $23.3 billion, beating analysts’ estimates of $23.2 billion. Its EPS of $2.47 also beat analysts’ estimate of $2.35.
Arconic will release its 4Q16 earnings on January 31. Its 4Q16 earnings could be an opportunity for Arconic to get some support from Wall Street.
General Electric (GE) expects 3%–5% organic revenue growth in 2017.