Boeing or Airbus? Which Stock Looks Best for 2014?

In many respects, Airbus trumped Boeing in 2013. But that's almost beside the point...

Jan 15, 2014 at 11:49AM

(NASDAQOTH:EADSY)

Or, maybe it's... Boeing (NYSE:BA)!

Actually, it depends on how you read the numbers, and which numbers you think are most important. So let's run down the stats quickly.

File
Boeing's 737 -- making winning look easy. Source: Wikimedia Commons

Deliveries (advantage: Boeing)
For the second year in a row, Boeing thumped Airbus in terms of the number of airplanes delivered to customers. The 648 planes that Boeing flew off to its 85 separate customers in 2013 exceeded the company's 2012 tally by nearly 8%. Boeing beat Airbus's performance (626 planes delivered) by 3.5%.

In one respect, however, Airbus did notch a win. Airbus noted this week that 93 separate customers received Airbus planes in 2013 -- eight more customers than Boeing reached. Given the difficulty (and cost) of convincing a customer to switch from a plane it's already invested in to a new plane, this could prove an advantage to Airbus going forward. Also working in Airbus' favor, 15 of its customers last year were brand-new buyers.

File
Airbus's A350 -- gaining on Boeing? Source: Wikimedia Commons

Orders (advantage: Airbus)
Airbus won a more decided advantage in the contest to book new orders. In 2013, Airbus clearly won this race, grossing 6% more orders than Boeing, and losing far fewer orders to cancellation. On average, Airbus customers were about one-third less likely to cancel their orders than were Boeing's. As a result, Airbus ended the year with 11% more plane sales booked than its rival.

 

Boeing

Airbus

Gross plane orders in 2013

1,531

1,619

Customer cancellations

176

116

Net orders for the year

1,355

1,503

Sources: Airbus, Boeing

Backlog
With so many more orders coming in, Airbus also has piled up a commanding lead in the contest to amass backlog. Airbus says it now has 5,559 aircraft waiting to be built -- a pile of backlogged orders $809 billion tall. In comparison, even Boeing's 5,080-airplane backlog looks a bit light.

And when you consider that Boeing's mainly been winning orders for smaller, less valuable, single-aisle planes, Airbus's advantage in backlog may be even bigger than it appears.

Value
As you can see, so far the arguments are pretty equally weighted, giving partisans of both Boeing and Airbus ample grounds to argue that "their" airplane maker is the biggest. For investors, though, the more important question is which company has the best stock. Given the choice to buy either Boeing or Airbus, which stock should you choose?

On this point, it's not even a close contest. The answer is "Boeing" by a nautical mile. Consider:

 

Boeing

Airbus

Market capitalization

$106.6 billion

$59.4 billion

GAAP earnings

$4.3 billion

$2.1 billion

Free cash flow (or outflow)

$9.0 billion

($955 million)

Dividend yield

2.1%

1.1%

Net cash (debt)

$6.3 billion

$1.2 billion

Right off the bat, you can see that Airbus is the more expensive stock at 28 times earnings compared to Boeing's P/E ratio of less than 25. And in fact, Boeing's an even better bargain than it at first appears.

Boeing's dividend is twice as large as Airbus'. Its massive cash war chest is five times as big. Topping it all off, Boeing's significant free cash flow (strongly positive where Airbus is negative, and twice as big as Boeing's own GAAP earnings), all confirm that Boeing is the best bargain.

Analysts see Boeing growing earnings at 12% annually over the next five years. If they're anywhere close to accurate about that, then Boeing stock is selling for a good enough price to buy today. Airbus' is not.

File
Boeing's 787 Dreamliner has had its share of troubles, but continues to soar. Source: Wikimedia Commons

Focus on what's important
You noticed the bit about Boeing paying its shareholders a 2.1% dividend yield, right? That's supremely important -- because dividend stocks can make you rich. It's as simple as that.

While they don't garner the notability of high-flying tech stocks, dividend-paying stocks are also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers