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Boeing Burning Through Cash

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  Image: Boeing’s shares have seen better days. By Brian Nelson, CFA Aerospace giant Boeing (BA) reported disappointing third quarter results on October 23, with revenue and non-GAAP earnings per share coming in lower than expected. Revenue fell 1% in the quarter, while the firm posted large operating and net losses, which reflected impacts from the IAM strike and previously announced charges on its commercial (777X, 767) and defense (T-7A, KC-46A Tanker, Commercial Crew, and MQ-25) programs. GAAP loss per share was $9.97, while core non-GAAP loss per share came in at $10.44. These numbers aren’t reflective of Boeing’s long-term earnings power, but they showcase the challenges the firm continues to face. Management acknowledged that the path ahead will be … Read more

Lockheed Martin Represents Key Aerospace & Defense Exposure

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By Brian Nelson, CFA On October 17, Dividend Growth Newsletter portfolio holding Lockheed Martin (LMT) reported decent third-quarter 2023 results with the firm growing revenue roughly 1.8% on a year-over-year basis, and the firm beating the consensus estimate for non-GAAP diluted earnings per share. We like Lockheed as our aerospace and defense exposure more than Boeing (BA), given the latter’s long list of troubles and deteriorated financial health, punctuated in part by troubles during the height of the COVID-19 pandemic and loss of life related to its 737 MAX platform. We think Lockheed offers a much better risk/reward and a healthy dividend to boot. Lockheed Martin yields ~2.8% at the time of this writing. When Lockheed reported third-quarter results, the … Read more

Dividend Growth Giant Lockheed Martin’s Share Price Surges 35%+ in 2022

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Image: Lockheed Martin’s shares have been bolstered by a robust share buyback program during the fourth quarter of 2022. Though we still expect shares to be resilient, some technical consolidation may be necessary. Image Source: TradingView By Brian Nelson, CFA We added Lockheed Martin (LMT) to the Dividend Growth Newsletter portfolio all the way back in January 2020 before the COVID-19 meltdown. Shares had lagged the S&P 500 for some time after surfacing the portfolio idea, but certainly not during 2022. Lockheed Martin’s shares have surged more than 35% during 2022, beating the market by a huge margin. We continue to like shares, but we would expect some share-price consolidation during 2023 after the huge gains. When Lockheed Martin reported … Read more

We’ve Updated Our Fair Value Estimate of Boeing; Has Aerospace Bottomed?

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Image: Boeing is expecting to turn the corner with respect to positive free cash flow in 2022 and grow it to ~$10 billion annually by 2025/2026. We think this is achievable. Image Source: Boeing By Brian Nelson, CFA The breakout of COVID-19 wreaked havoc on the airline business and the commercial aircraft-making business alike. But has the commercial aerospace industry finally bottomed? We took a hard look at our valuation model of Boeing (BA), and we’ve tweaked our near-term profitability assumptions and made material changes to our estimates of working capital assumptions in the out-years. Though the result was a lower fair value estimate for the aerospace giant, we reiterate that after several quarters of negative free cash flow, Boeing … Read more

Lockheed Martin Facing Near Term Headwinds; Longer Term Outlook Remains Bright

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Image Source: Lockheed Martin Corporation – Second Quarter of Fiscal 2022 IR Earnings Presentation By Callum Turcan Lockheed Martin Corporation (LMT) reported earnings for the second quarter of fiscal 2022 (period ended June 26, 2022) that missed consensus top- and bottom-line estimates, largely due to delays in securing another domestic F-35 contract and supply chain hurdles. In our view, these are near term headwinds that are resolvable. Reportedly, Lockheed Martin is nearing a deal worth ~$30 billion with the US Department of Defense (‘DoD’) covering orders for around 375 F-35 aircraft. As it concerns supply chain hurdles, the resumption of normal economic activities (as the worst of the COVID-19 pandemic is put behind the world economy) should steadily allow industrial … Read more

Dividend Growth Idea Lockheed Martin Doing Its Best to Arm Western Allies

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Image Shown: Dividend growth idea Lockheed Martin Corporation is very shareholder friendly. The defense contractor is doing its best to arm Ukraine and other Western allies during these difficult times. Image Source: Lockheed Martin Corporation – First Quarter of Fiscal 2022 IR Earnings Presentation By Callum Turcan The Russian invasion of Ukraine in February 2022 and simmering geopolitical tensions in East Asia between Western aligned nations and China over Taiwan and other issues have created a backdrop that is conducive to significant increases in national defense spending. Though we hope peace prevails soon, the realities on the ground in Ukraine and elsewhere call for North Atlantic Treaty Organization (‘NATO’) member nations and other Western aligned nations to ramp up their … Read more