Wednesday, September 2, 2015

The KC-46 Will Shadow Boeing Stock Investments

The KC-46, "Pegasus Project" has had its ups and downs and delays. Its fixed cost lid directly affects the Boeing stock report. The trouble with the KC-46 project influences Boeing stock can only change when its military outliers change within nominal forces. The long term stock outlook is only an opinion tied with the roller coaster approach of the KC-46 status. In time: as mistakes, glitches and money are retired on the project, Boeing stock should shape up as a stable investment considering those short term indices. The long term is predicated on long term outcomes for the KC-46 project.

Image result for Pegasus KC-46 

Boeing is at a critical point for the project. What is at stake is its reputation and its relationship with military programs like the LRB (Long Range Bomber). There is some residual risk spinoff downward if the project duds out. Or does not meet the military's expectation.

The above link gives the "Bidness" perspective on the KC-46 project.

"Following the earnings release, analysts had pointed out that the program could prove to be an impediment to growth for Boeing’s top and bottom line, if there is another delay in the program. The company had lowered its full-year 2015 (FY15) earnings estimate from $8.20–8.40, to $7.70–7.90 to reflect the $0.77 per share impact of the charge realized during the quarter."

"While the program could adversely affect the company’s relation with the Department of Defense, we believe that other programs, such as the P-8A surveillance aircraft, would keep the relationship between the two entities strong. The company was reported to have received a contract worth $1.49 billion for the delivery of 13 more of the P-8A aircraft on August 27, showing high demand for the offering from Boeing’s DSS segment."

I had referred to  Boeing's defense posture with its DOD's P-8A success as an example Boeing can deliver on a Military timeline as Winging It had mentioned in an earlier blog. Boeing's reassurance for KC-46 project is often stated by Boeing talking heads. Boeing has just announced another delay after those reassurances from mistakes made with the refueling systems. Thus rattling investor confidence at this time. 

The time is a speck on the project which is soon to be updated. The real concern about time is losing another KC-46 year due to setbacks at this juncture. That is becoming less likely each day. When the first KC-Pegasus successfully flies fully loaded in an operational status this fall, it is only two months late in the the over-all picture. Then Boeing will exhale, and investors will clamor once again with Boeing's military outlier against the company as a whole. It's wait and see time for Boeing and the Pegasus. A swing vote by investors will occur by year's end after its first fully operational flight.