The Boeing Company: A year of instability and price fluctuations

The Boeing Company: A year of instability and price fluctuations

The Boeing Company, together with its subsidiaries, is the world's largest aerospace company that designs, develops, manufactures, sales, services, and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems, and services worldwide.

The company operates in four segments: Commercial Airplanes; Defense, Space & Security; Global Services; and Boeing Capital.

Boeing, with its drop in revenue, underperformed the subsector average of 5.4 percent. Since the same quarter last year, revenues fell by 12.0 percent, weakness in the company's revenue led to lower EPS.

After a year of stock price fluctuations, the result is that The Boeing Company price has not changed very much. Since September 2018 until now, the stock fell by approximately 2.15 percent from 371.77 to 364.01. Although its weak earnings growth has played a role in this result, given the fact that the performance of the overall market, as measured by the S&P 500 Index, was similar.

Regarding the company’s financial performance, the gross profit margin for the second quarter of this fiscal year has declined when compared to the same period a year ago. Sales and net income fell, underperforming the average competitor within its subsector.

Boeing has very weak liquidity; the Quick Ratio is 0.25, which clearly shows a lack of ability to cover short-term cash needs. The company's liquidity declined from the same period a year ago, despite already having very weak liquidity to begin with, which indicates a deteriorating cash flow. At the same time, stockholders' equity significantly decreased by 269.32 percent from the same quarter last year.

Early in March, a tragic crash of an Ethiopian Airlines jet that killed 157 people Sunday led to the worldwide grounding of its 737 Max jets, the company's most crucial plane.

As a result of the chaotic situation, the company decided to cut production on the 737 MAX 8 model. This was a terrible news for Boeing suppliers, especially General Electric (GE), the sole supplier of LEAP engines for the Boeing 737 MAX 8.

General Electric’s cash flow took a hit from the grounded 737 Max 8 model, and the manufacturer of the engines for the popular planes warned that the trend would persist through 2019, as the consequences from two fatal crashes ripples through Boeing’s supply chain.