Last Week's Top Dow "Disaster" Stock

This past week marked the official kickoff to earnings season, when aluminum giant Alcoa (NYSE: AA  ) announced its quarterly results after the markets closed on Tuesday. While earnings and quarterly results should be the key drivers to any stock moves, the majority of the time the noise from the market-news channels shapes investors' opinions more than anything else.

Last week was no different for a number of the components that make up the Dow Jones Industrial Average (DJINDICES: ^DJI  ) . While the index managed to gain 52 points, or 0.38%, during the past five trading sessions, not all of its stocks ended the week on a high note. Boeing (NYSE: BA  ) , for one, ended the week down 3.07% after it couldn't seem to escape the media's attention.

So what happened?
In five days, one of the aircraft manufacturer's newest commercial jets, the 787 Dreamliner, was the subject of five reports. On Monday, a Japan Airlines 787 caught fire after landing at Boston's Logan International Airport from what's now being reported as a battery pack fire. All the passengers had already left the plane when smoke was reported, and no one was injured. That incident set the stage for a weeklong disaster for Boeing.

On Tuesday, another 787 Dreamliner at Boston's airport was delayed from takeoff for almost four hours after a fuel leak was discovered. Wednesday rolled around and another plane had brake issues, causing the carrier, All Nippon, to cancel the flight.

Thursday brought no news on any of the 50 Dreamliners that have been delivered to customers. But on Friday, there were two more planes with reported problems. One had a cracked cockpit window, and another reportedly was leaking oil from an engine. Both were minor issues, and if it hadn't been for Monday's incident in Boston, we may have never heard of these or any of the other subsequent incidents.  But it was all enough for the Federal Aviation Administration to announce on Friday that it will conduct a comprehensive review of the aircraft. Officials will review the design, parts manufacturing, and assembly to determine whether there are any flaws that may be causing the Dreamliner's numerous issues.  

The good news
As long as no one gets hurt in incidents like these, everything is essentially good news. But for investors, there are a few key takeaways in determining whether any of this will hurt Boeing's share price. One thing to consider is that new aircraft often go through growing pains. Mike Sinnet, the 787's chief project engineer, said on Wednesday that the new plane has had fewer issues thus far than the 777 did when it was introduced in the mid-1990s. What's more, there are only a few commercial aircraft manufactures in the world, Boeing and Airbus being the two largest, and few believe that anyone will be able to steal market share away because of the high barriers to entry.

Along those same lines, it's worth noting that Boeing hasn't lost a single order for its 787 Dreamliner, and it's unlikely that it will. It's not as if customers have any other option for new planes right now.

More Foolish insight
With great opportunity comes great responsibility. For Boeing, which operates as a major player in a multitrillion-dollar market, the opportunity is absolutely massive. However, the company's execution problems and emerging competitors have investors wondering whether Boeing will live up to its shareholder responsibilities. In this 
premium research report, two of the Fool's best industrial minds have collaborated to provide investors with the key must-know issues around Boeing. They'll be updating the report as key news hits, so make sure to claim a copy today by clicking here now.


Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2193053, ~/Articles/ArticleHandler.aspx, 4/20/2014 4:00:04 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement