A man Climbed onto the wing of a plane while it was about to take off! What?! An analysis on Boeing


Let’s talk about world news today, Journey with Money chanced across this news in the internet and got a big shock of it!

As shown in our title, what happened was that a man climbed onto the wing of a plane while it was about to take off. Are you serious?! How is that possible?

This is the reported by Independent. https://www.independent.co.uk/news/world/africa/wing-plane-climb-engine-nigeria-lagos-airport-security-a9012686.html

As reported, the plane is a Boeing 737 aircraft taking off in Nigeria. Here is the video. The man dangerously climbed onto the wing of the aircraft causing panic in passenger and delay of flight.

Alright, as value investors, we are not going to talk about the man today, instead, we are more interested in what are the good companies around us and in news that we might consider to invest in.

Here in the news, Boeing 737 was mentioned. Yes! The company that we are going to look at is Boeing!

First of all, let’s look at what does Boeing do and how does Boeing earn money.

 

Boeing’s business in general:

boeing - company info - journey with money

So Boeing is an aerospace company and it does defence machinery too!

Since it is the largest in the world, that would be the competitive advantage of this company. Journey with Money feels that Boeing is in a Niche market (efficient scale) where is it hard for other competitors to enter the market and fight with them. Because once governments secure their military weapons and machineries, it is not that easy for them to purchase from a new company.

 

Company Health by looking at numbers

Next! Let’s look at the financial statement of Boeing as a company. For Journey with Money, we always look at financial number to determine whether a company is healthy on the outside but rotten on the inside.

Below is a screenshot from Morningstar:
boeing - financial statement - morningstar - journey with money
Earning per share of the company looks healthy: we see a consistent uptrend year after year. This means that the company is earning more money after each year. Which is good! As a value investor, we want to invest in companies that have consistent predictable earnings every year. We don’t like companies that lose investors’ money or earn less money after each year.

Operating Cashflow of the company is positive every year! It is very important to know that a company is making money and brings money back to the company through its main operations rather than other sources. For Boeing, we really love the fact that the operating cashflow is positively increasing every year. As an investor, we feel safe that the company has enough money from its operations.

It is also a good news that a company gives out dividend! And it is even happier to find out that the dividend is increasing every year! By looking at the dividend payout ratio, we could say that the company does not over give dividends to its investors. This is so that the company has enough money for possible R&D and business expansion.

Debt Analysis of Boeing: (screenshot from Morningstar)
boeing - debt analysis - journey with money
Looking at the Debt/Equity ratio of Boeing, Journey with Money team is quite concern because Boeing has a high percentage of debt compare to equity. This is concerning because as investors, we wouldn’t want the company we invested in being unable to pay off their debt.

 

What is the entry price of Boeing?

The current price of Boeing is USD$377.36 (accurate as of 19 July 2019), and by looking at the consistent dividend that the company is giving out, we would like to valuate Boeing as a possible Dividend stock. However, the current dividend yield for Boeing is only 2.18% and to qualify as a dividend stock, Journey with Money would like to have at least 5% of the dividend yield. Therefore, we would wait until the stock price of Boeing to drop to USD$164.52 (estimate dividend yield 5%) for us to enter.

Portfolio sizing

If you are entering this position, remember to position it within 10% of your entire portfolio! REMEMBER! DO NOT over position your investments so that the risk could be mitigated!

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None of Journey with Money’s writer owns Boeing and this post is PURELY for educational purposes and it does not meant to be a recommendation of any stock/company.

 

Invest safely and have a good weekend ahead!

Cheers!

Angel Hsu

Journey with Money

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