General presentation of the Boeing company:
The Boeing company was established in the United States in 1916. The company was one of the first to produce airplanes internationally. Its main competitors are Airbus, Lockheed Martin and Northrop Grumman. Boeing continues to work in the field of civil aviation, military and space aeronautics.
But the success of Boeing as we know it today is also due to the acquisition of two other American companies, Rockwell International and more recently, Mc Donnell Douglas.
Boeing has a total turnover of over 68 billion dollars for a net profit of over 1.3 billion dollars per year. Its activities can be classified into two main categories, namely:
- Commercial and civil aviation, which represents 60% of the group's turnover.
- Defense, which represents more than 23% of the company's total turnover (production of helicopters and military aircrafts along with missiles and satellites).
Knowing Boeing shares competition:
Due to the specific nature of its activities, the Boeing group does not face much competition. The only manufacturer with which it fights regular battles to win or recover certain important markets is Airbus.
Since the late 1990s, the two groups have been in fierce competition in the field of civil aircraft but also in the field of defense. Boeing is also a direct competitor of the Airbus defense and space subsidiary, which operates in the fields of military aircrafts and launchers.
Apart from Boeing and Airbus, no other company in the aeronautical construction sector has managed to find a place in the major stock markets in the world.
The strategic alliances set up by the Boeing group:
Whether it be for the supply of aircrafts, their maintenance or the very design of new technologies in this sector, Boeing has forged links with other large international companies and has been able to set up certain strategic partnerships. To help you better understand the challenges of such associations, here are the main current partners of the Boeing group:
- Dassault System : a technology company has signed a partnership with Boeing in order to create various specific digital tools as part of the development of new aircrafts for aviation. The two companies are collaborating in the development of the 7E7 Dreamliner, a revolutionary aircraft.
- Air France KLM: The Boeing group is also under contract with Air France KLM a partnership aimed at ensuring the maintenance of the 737 Max aircraft produced by the group.
- Safran: In 2018, the Safran group joined forces with Boeing in the design, production and services of Auxiliary Power Groups.
- Embraer: More recently, in 2019, it's with the Embraer group that Boeing joined forces aimed at establishing a strategic partnership around the field of commercial jets and the military transport aircraft KC-390.
Introduction and listing of the Boeing stock:
Boeing was first listed on the NYSE (New York Stock Exchange) market in 1996, but is also listed on the Euronext Amsterdam market today. Boeing's total market capitalization is over $ 47 billion. Its quotation is taken into account in the calculation of the American S&P 500 index.
The historical development of the Boeing stock since its first listing has shown a strong correlation with the world economic situation. From 2005 to 2007, the stock experienced a strong upward wave, pushing its price from $ 58.38 to $ 104.99. A drop followed due to the international economic crisis until 2009 when it reached its lowest level $ 30.1.
But the respite was short-lived since Boeing's shares then greatly strengthened going beyond $ 150 at the end of 2016.
In the months and years that followed, the share price experienced other upward trends and the stock hit a new historic peak at $ 436.32 in February 2019.
Stock market data
Here is some stock market data about the Boeing stock which will allow you to better know this equity in order to implement your strategies:
- Boeing's market capitalization amounted to 207,835.52 MUSD in 2019.
- The Boeing stock is currently listed on the Main Market of the NYSE in the United States.
- The company is also included in the calculation of the Dow Jones Industrial Average stock market index .
- Its shareholders are made up of various international groups and individual investors.
To better understand the events that influence Boeing's share price, here are a few dates that have marked the recent history of the company:
- In 2006, Boeing becomes the world's largest aircraft manufacturer.
- In 2008, it also became the world's leading defense company.
- In 2009, Boeing recorded a 28% increase in its commercial aircraft deliveries with no less than 481 aircraft over the year, the majority of which were Boeing 737s.
- In March 2011, Boeing signed an agreement with two Chinese airlines for the sale of 43 aircraft to be delivered between 2014 and 2015.
- In November of the same year, Boeing signed an order for 50 long-haul aircraft for the Emirates airline worth 18 billion dollars and an order for 230 medium-haul aircraft for Lion Air worth 22 billion dollars.
- In 2014, Boeing records 1,432 orders and 723 deliveries, which is its historical record.
- In 2016, Boeing signs an agreement with Morocco on an industrial ecosystem.
- Also in 2016, it restructures its defense business.
- In March 2017, Boeing announces the voluntary departure of 1,880 members from Seattle.
- In 2018, the Boeing group announced the purchase of KLX, an American aeronautical equipment manufacturer for 3.2 billion dollars. In the same year, the group set up a joint venture with Embraer, which contributed assets combining its civil aviation activities valued at $4.75 billion and $3.8 billion to Boeing. The joint venture is 80% owned by Boeing.
- In 2019, the group was hit by the Boeing 737 Max, which suffered several accidents and was banned by the European Aviation Safety Agency in March for European airspace.
The advantages and strengths of the Boeing share as a stock market asset :
First of all, the positioning of the Boeing group in its sector of activity is of course one of its main strong points. Indeed, the Boeing group is currently one of the largest groups in the world in the field of aerospace. It is also one of the leading manufacturers of defence, space and security systems and one of the world's largest manufacturers of commercial aircraft.
From a purely financial point of view, the Boeing group also reassures investors through its results. Indeed, over the last few years, the American group has shown a constant and significant increase in turnover. This also applies to its operating result, which has also shown interesting and stable growth. This improvement in the company's results is largely due to the ability to deliver on time the aircraft ordered by Boeing's customers. Indeed, the group is known for ensuring optimal operational efficiency, which of course enables it to increase its revenues and continuously improve its profitability.
Of course, and given the high-technology sector in which Boeing operates, it is above all an innovative group that invests heavily in research and development. The group has thus shown its constant interest in R&D, in particular in engineering, operations and technology activities. Thanks to these numerous investments in research and development, Boeing is able to continuously expand its range of products and services. As a result, it can maintain its position among the leaders in its market.
Finally, it is also interesting to note that Boeing is constantly seeking to expand its range of sustainable products and fuels. By expanding its product range, Boeing can meet all its customers' current and future needs and build long-term customer loyalty. Boeing's strong focus on sustainable fuels also helps to reduce CO2 emissions. This contributes to a better image of the company in the eyes of the general public at this time of environmental concern.
Disadvantages and weaknesses of the Boeing share as a stock market asset :
First of all, we can point out the problems the Boeing group has with its workforce. Indeed, Boeing about 38% of the total workforce of this group is supervised by a powerful trade union. However, this union regularly causes employees to stop working. These strikes and other stoppages naturally lead to a significant drop in productivity, which can sometimes result in delivery delays. This, of course, has a direct impact on the quality of Boeing's relations with its major customers.
We also know that the Boeing group depends to a large extent on the contracts it has signed with the American government. In fact, U.S. government contracts account for a large portion of Boeing's overall sales. It is estimated that this represents nearly 30% of the group's annual sales, which is considerable. However, the sustainability over time of these contracts depends on many factors, be they economic, budgetary or simply political. As a result, this dependence on US government decisions can represent a threat to the future and in any case leads to a lack of visibility on results for investors.
Finally, the Boeing group also shows a significant dependence on some of its suppliers, which thus have significant negotiating power. This mainly concerns suppliers of raw materials or integrated components as well as other types of suppliers essential to the group's activities. Suppliers are thus able to negotiate their prices with Boeing, which is often forced to accept their terms and conditions since it needs their products and materials in order to carry out its business and to continue production. This problem naturally leads to production costs that are sometimes difficult to control, which have a direct impact on the group's overall profitability and net income.