Thursday, July 27, 2017

Boeing Cash Drives Its Stock

A Movie actor has its time in the fame. It seems like a movie made by an certain actor becomes successful no matter the theme. It also seems the actor's run at stardom will never end. Then without any kind announcement the star actor fades almost over night. Nobody really know why this phenomenon occurs. I remember back ten years ago when Julia Roberts made a movie she made $20 million and was the highest paid female actor in the business. She was a cash kind of person. Her stock in movie making was the highest. But what happened? Julia no longer pushes out movies every year but remains a much loved actor by all kinds of movie goers.

Boeing is a cash kind of entity, will they repeat the profile of a superstar and fade as fast as it comes onto the scene? Fortunately a business is the kind of entity that must reinvent itself every so many times it comes to market. Julia Roberts can't control the scripts offered nor her age changing the audience appeal. Boeing too can control what it is and appeal to an ever fickle aviation audience. Thus bringing back a full circle of cash driving Boeing stock valuation.

Boeing's second quarter 2017 just reported the best quarter since 2009. Its stock value is driven by cash infusions from sales. The definition of a Boeing sale is an airplane delivered and does not reflect an airplane ordered. Going back to production numbers becomes a critical determiner for cash flows. The mix of product delivered is the the secret of Boeing's cash. If producing and delivering less aircraft than last year an entity would expect a lower cash receipt account. Boeing played some tricks on the way to the bank. It delivered aircraft which made more money when recognizing a lower cash received  trend  based on units delivered.

CNBC Quotes:

"Monster cash flow," said analyst Robert Stallard at Vertical Research. The results were "about as close to perfect as it gets from Boeing," he added."

"Boeing has cut spending aggressively by streamlining production, reducing payrolls and winding down development costs. Its 787 Dreamliner contributed about $530 million in cash in the quarter."

If repeating a 1/2 billion cash quarter every quarter, it won't be long before Boeing pays back all its developmental markers enough to reinvent itself again.

Boeing refuses to be a retiring starlet, It's in it to win it!

The trend line has an arrow tip pointing right at a NMA type. The ducks on lake Washington are lined up in a row. Research the market, find launch customers, and find cash to build it. Boeing hired a administrative assistant only to make check marks on its lists of things-to-do which is finally checked-off after the recent 2nd quarter reports.

Since Boeing has controlled its production costs and has an over abundant backlog of aircraft on order, Its a matter of executing its plan without interruption. This only takes time and the outlook ahead says Boeing has already stocked up enough time to improve all its production metrics. The 787-10 is a matter of time as is the 777X. Boeing has learned how to complete a plan as it had learn with the 787 program. The Max program is the symbol of completeness for its single aisle offering. Its competitor in that division has a major engine nightmare. Boeing took its lesson many years ago when it found CFM to do the job with immense reliability for the 737 program. Now Airbus has stalled its big idea for two engines choices for its A320 NEO. The P&W gear driven engine is in some refinement trouble and backs the Airbus delivery goals off a bit thus strangling its cash flows opposite of what Boeing enjoys at this time.