Why Boeing Stock Flew High after Mass Sell-Off


Feb. 15 2018, Updated 1:02 p.m. ET

Major indexes amid sell-off tide

After reaching year-to-date highs of 26,616.7 on February 13, 2018, the Dow Jones Industrial Average (DJI) tumbled heavily in the mass sell-off rally. Though it recovered by around 800 points or 3.3% post sell-off, DJI is still down 0.23% from January 1, 2018. The iShares Dow Jones US Industrial ETF (IYJ) also tanked in the sell-off rally. It is down 0.47% year-to-date. The SPDR S&P 500 ETF Trust (SPY), an indicator of the broad market, is marginally up 0.11% since the beginning of 2018.

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Boeing is the winner in the industrial space

The winner in the industrial space was Boeing (BA), which replaced General Electric (GE) as the largest US manufacturer by market capitalization. The stock fell 9.2% during the sell-off period. However, it bounced back 5.8% to close at $343.16 on February 13, 2018.

Year-to-date, this Chicago-based world leader in aerospace and defense has returned 17.3% to stock owners. In the last one year, Boeing stock has more than doubled with whopping returns of 105.4%. Boeing makes up 0.83% of SPY’s portfolio holding. The returns of Boeing’s peer group since the beginning of 2018 are as follows:

  • Lockheed Martin (LMT): 9.4%
  • Embraer (ERJ): 12.2%
  • General Dynamics (GD): 5.2%
  • Northrop Grumman (NOC): 12.4%
  • Raytheon (RTN): 12.1%
  • General Electric (GE): -14.6%
  • Harris (HRS): 7.6%

Based on Boeing’s 4Q17 earnings call transcripts, the company seems to be extremely positive about its 2018 outlook. Plus, the Tax Cuts and Jobs Act will likely provide a great stimulus to the company’s net earnings in the coming quarters. Boeing expects an effective tax rate of 16% for 2018. In December 2017, the company authorized a new $18.0 billion stock buyback program along with a 20% rise in dividends.

In the next article, we’ll discuss Boeing’s recent developments.


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