Let’s take a look at Boeing stock. It’s all over the news. If you don’t know why you must be in hiding somewhere.
Before I get into the nitty-gritty about Boeing and the stock price …
It would be very easy to dehumanize the terrible tragedy of the Ethiopian Airways crash on March 10. And as time passes you may hear less about those directly affected by this and the Lion Air crash which happened on October 29, 2018.
So, while I’m going to talk about the stock price, let me say my heart goes out to all those affected. Let’s not forget that 346 people died in these two terrible tragedies.
As you know by now, both crashes involved Boeing’s new 737 MAX 8 aircraft. There’s evidence of similarity between the Ethiopian Airways and Lion Air crashes. Flight data recorder evidence points to an anti-stall system dubbed the MCAS.
On March 13, the U.S. Federal Aviation Authority grounded the 737 MAX 8 fleet in the wake of growing international pressure. Boeing issued a press release in support of the 737 MAX’s grounding.
There’s an investigation underway about the safety certification process of the aircraft. Specifically, whether the process followed long-standing protocol. A joint Department of Justice and Department of Transportation Inspector General investigation into 737 MAX certification began before the Ethiopian Airlines crash.
I’m not going to give my opinion about how this is all unfolding. I’ll let the investigators do what they do best. But I do know this is not good news. For Boeing specifically, and the airline industry in general. Events and news such as this can have a huge impact on a stock’s price.
Table of Contents
- 1 Boeing Stock Price: A Visual History
- 2 What Is the Boeing Stock Price Today?
- 3 How the Ethiopian Airways Crash Affected Boeing Stock Price
- 4 Are Investors Still Bullish On Boeing?
- 5 How Do Analysts View Boeing Stock?
- 6 Trading Challenge
Boeing Stock Price: A Visual History
Boeing was founded over a century ago on July 15, 1916. While there’s stock data available as early as 1968, Boeing’s initial public offering (IPO) was on January 13, 1978.
Here’s a historical chart for The Boeing Company (NYSE: BA)
As you can see from the chart, Boeing has been on a long and fairly steady upward trend ever since. The stock price suffered, along with the rest of the market, during the Great Recession. It fell from high of $107.83 in July 2007 to $29.05 in March 2009. It wasn’t until September 2013 that Boeing’s stock price recovered to pre-financial crisis levels.
In January 2017, Boeing broke through previous resistance around $158. It reached its present level in the low $370s before a period of consolidation. After the Lion Air crash in October 2018, BA once again dropped but recovered for strong gains and new highs in the first two months of 2019. The stock hit a new high of $446.01 on March 1st.
What Is the Boeing Stock Price Today?
My team will keep this price updated as things develop. As of writing, Boeing opened at $350.55, and closed at $354.90. I’ll get more into analyst outlook later in this post but StocksToTrade is showing BA as bullish.
How the Ethiopian Airways Crash Affected Boeing Stock Price
News of a second deadly 737 MAX 8 crash in under 5 months led to a 16.82% drop in Boeing stock price. Look at the chart and you’ll see the major gap down between March 8 — a Friday — and March 11, the day after the crash.
If you’ve been following me for a while, you know I trade low priced and highly volatile stocks. So a 16.82% drop might not seem like a big deal. After all, some of the stocks I trade can move 20%, 50% or even 100% in a matter of minutes or hours.
Let’s put this in perspective. Boeing is not only one of the 30 stocks included in the Dow Jones Industrial Average (DJIA), it’s the highest weighted stock. What does that mean?
The DJIA is a price weighted index. That means the number you see scrolling across your screen when you watch the news is not a simple sum of all the Dow components. They had to come up with some way to account for stock splits or changes in which companies are listed. So the DJIA is the sum of the component stock prices divided by a standard divisor.
Because of Boeing’s stock price, it carries a weight of more than 10% of the DJIA index price (as of March 13 it was 11.5%). A big percentage of this year’s gains on the DJIA can be attributed to Boeing’s massive upswing.
It’s interesting to note that Boeing’s drop doesn’t seem to have affected the DJIA too much. It opened lower the day after the Boeing’s plunge but has risen steadily since. Still, I’m keeping an eye on this for a couple of reasons.
First, roughly three quarters of stocks follow the overall market. And the DJIA, for better or for worse, has an effect on the overall market. Second, this isn’t anywhere near finished. Boeing and the FAA are under big-time scrutiny and who knows what will happen?
Are Investors Still Bullish On Boeing?
That might be the question of the day. Let’s break things down to understand why Boeing is still hanging out in the $370s and could stay there or even go up. (It’s already up 1.48% on the day at the time of writing.)
Boeing Pays Dividends
Boeing is a strong dividend-paying stock. The company’s recent track record: 7 years of consecutive dividend growth. The most recent dividend increase, announced in December, 2018, was 34.5 cents per share.
What is Boeing’s Stock Dividend?
At the time of writing this post, dividend yield is 2.21% and the annual dividend is $8.22 per share. As I write the market has opened and the bulls are winning. Boeing’s stock is rising …
… so the numbers I’m about to share are changing — even as I write.
What You’d Earn in Dividends With a $5,000 Investment in Boeing Stock
With StocksToTrade open and prices scrolling down the order book …
… Boeing is trading at $377.02. So for an investment of $5,000 (not taking into account any commissions or fees) I could buy 13.262 shares of Boeing. That would give me a dividend yield of roughly $109 per year.
Here’s the math:
- $5,000 (investment) ÷ 377.02 (share price) = 13.262 (shares purchased)
- 13.262 × 8.22 = 109.01 (yearly dividend paid)
Boeing pays a quarterly dividend. Which means if you set up your investment to re-invest dividends in more Boeing stock, the size of your holding would increase. Over time, this compounding can grow a long-term investment account big-time.
It’s not how I trade, but assuming Boeing stock doesn’t fall off a cliff, it looks like a good buy-and-hold investment.
Has Boeing Stock Ever Split?
Boeing stock has split a total of eight times since 1962, but only six times since going public in 1978. If you’re wondering why a company would do a stock split prior to IPO, it’s because they’re attempting to re-calibrate the price for some reason. Often to get the price as close as possible to where they want it to trade on its first day.
Boeing splits have mostly been 1.5 to 1. That means for every 2 shares of BA stock you owned you’d have 3 shares after the split. The most recent stock split, in September 1997, was 2 to 1. There are a variety of reasons companies do stock splits. The most obvious is to make the stock attractive to more investors.
Is Boeing Financially Sound?
Boeing is one of the big boys of the commercial air, defense, and space industries. They have a backlog of orders to keep their airplane builders busy for years. Seriously. Plus they have billions in government defense contracts.
Many people don’t realize Boeing has other divisions. They were a pioneer in the field of wind energy systems (yes, wind turbines). Over the years they’ve had their fingers in a lot of pies. Everything from software development & IT services to logistics, light rail, and more. They still maintain a commercial services division — mostly involved with aviation and defense.
Boeing also owns several subsidiaries within the aviation industry.
What does this mean in relation to the recent 737 MAX tragedies? It means that while Boeing stock took a hit, the company will likely weather the storm. Yes, the stock price could continue to get thrashed if the investigations were to uncover safety shortcuts. But it’s a massive company and the 737 MAX is a very small piece of the pie.
Since fundamental analysis of a company is part of your trading education, let’s take a look at Boeing’s most recent numbers …
Boeing Financials as of 12/31/2018
Boeing’s 2018 financials in a nutshell:
- Earnings of $10.46 billion.
- Revenue of $101.13 billion.
- Total assets of $117.36 billion.
- Total liabilities, or debt, of $116.95 billion.
- Earnings per share of $17.85
- P/E (price to earnings ratio) of 21.20
How Do Analysts View Boeing Stock?
Using StocksToTrade, TipRanks tells me The Boeing Company is a moderate buy. There’s a low stock price estimate of $300 per share, a high estimate of $525 per share and an average of $432.53 per share. Those numbers are based on 21 ranked analysts reporting.
So far, no major bank has downgraded their Boeing stock outlook in light of the unfolding story.
One thing I love about StocksToTrade is one click gives me access to this information. One more click and I can read the individual analyst reports. There are also tabs for Hedge Fund Rating and Insider Rating.
Here’s what it looks like:
Full and fair disclosure: I helped develop StocksToTrade. I was tired of the need to be logged in to several sites at the same time to get the information I need.
If you’re not yet ready to get a StocksToTrade subscription, you can find analyst ratings over on Finviz. Here’s a link to the Finviz screener with BA ready to go.
There you have it. A quick look at Boeing in the aftermath of two air crashes and in the midst of a major government investigation.
Back in the day, this kind of research took me hours to complete. And while writing this post took a while, finding the relevant information didn’t take long at all. But I’ve been at this for two decades now. I learned most of this stuff the hard way — without a mentor.
My goal with the Trading Challenge program is to help you navigate the steep learning curve faster. How can you learn to quickly understand a company like Boeing and how news might affect the stock’s price? Apply for the Trading Challenge.
To trade like a pro you have to gain knowledge, define your strategy, develop a risk management system, and practice. A lot. You learn by making small trades and building your account slowly. Over time (remember, my top student didn’t make a penny for his first 9 months of trading) you develop the skills.
This is what the Trading Challenge is about.
Are you a trader? Have you been following the Boeing news? What are your thoughts on the investigation and grounding of the fleet? New to trading? What have you learned in this post you can use as you gain knowledge? Comment below.