Boeing (BA) Stock Price Drivers

Stock Price Drivers Commercial Aircraft Aircraft manufacturers depend on new orders from airline carriers and militaries around the world. Recent increase in demand in the Middle East and Africa combined with record orders at the Paris Air Show and US airlines profitability is leading to new orders by carriers that are resulting in earnings for Boeing. The company currently has a seven year backlog for its 737 narrow-body and a 3.5 year backlog for its 787 wide-body planes. Domestic RPMS a measure of airlines profitability, and Boeing's EPS are positively correlated. Domestic RPM vs. BA EPS Domestic RPMS BA EPS $1.6 160,000 $1.4 $1.2 140,000 $1 120,000 $0.8 1QFY11 3QFY11 1QFY12 3QFY12 1QFY13 Interestingly, Boeing's earnings are also positively correlated to jet fuel costs. As a cost driver for airlines, higher jet fuel prices should lower revenues for Boeing, however commodity prices typically rise on the back of an improving economy which also leads to higher air traffic as tourism and travel picks up, resulting in higher revenues for airline carriers. Boeing's EPS vs. Jet Fuel Price EPS Jet Fuel Price/ Gallon $6 $5 $4 $3 $2 $1 $- 2007 2008 2009 2010 2011 2012 Defense & Security Cuts in military spending will affect the industry's bottom line. However, with a diverse portfolio and international presence Boeing will be able to partially offset some of those affects. BIDNESS SOURCES: Company Data, SEC filings, Bloomberg Professional Services Etc. DISCLAIMER: Bidness Etc(TM) and related marks are owned by Bidness Etc. Any other trademarks appearing on this website are the property of their respective owners, and are not used to indicate the origin of goods or services offered or provided by Bidness Etc herein or to suggest approval for or affiliation with Bidness Etc. (million miles)