What Drives Boeing's Massive $440 Billion Backlog?

With increased commercial plane deliveries, and an impressive backlog, Boeing’s future looks solid.

Apr 26, 2014 at 10:01AM

Boeing 737-900ER. Photo: Boeing

Boeing (NYSE:BA) reported its first-quarter 2014 earnings results on Wednesday. The bad news is that Boeing's defense, space, and security unit reported a first-quarter total revenue decline of 6% compared to the same time last year. The good news is that Boeing's commercial airplanes unit reported a revenue increase of 19%, and a significant backlog of $374 billion -- again, that's just for commercial airplanes. Here's what else you need to know. 

Bring on the billions
When it comes to defense contractors, Boeing is one of the biggest in the world. However, its defense segment pales in comparison to its commercial airplane unit. For example, Boeing's total backlog at quarter-end was $440 billion, but only $66 billion came from defense. Yes, $66 billion is a significant number -- especially when you consider that the top defense contractor in 2013 by defense profits, Lockheed Martin (NYSE:LMT) reported an order backlog of $79.6 billion as of March 30 -- but it's nowhere near the size of Boeing's commercial airline backlog.

As such, when looking at Boeing's future, the primary thing to watch is Boeing's commercial airplane segment.

Boeing's commercial airplanes unit


Depicted here is a Boeing 737-800 in Air Lease Corporation livery. Photo: Boeing.

In its Q1 report, Boeing's commercial airplanes segment reported over $12.7 billion in revenue, as well as an increase to its operating margin of 0.4 points, bringing it up to 11.8%. However, the thing that's most impressive is Boeing's commercial airplane deliveries. For its first quarter, it delivered 161 planes, which is an increase of 18% compared to the same time last year.

Further, in its first-quarter report, Boeing states; "During the quarter, the 787 program reached a 10 per month production rate and completed preliminary design review on the 787-10. ... In April, the 737 program reached a production rate of 42 per month." Considering the 737 is Boeing's most popular plane when it comes to orders, a production rate of 42 per month is great news.

This is important because while a backlog of $374 billion for commercial airplanes is great, it means little if Boeing can't deliver them. Consequently, Boeing's increase in deliveries is good news for investors.

What to watch going forward
Boeing's first-quarter 2014 earnings report is welcome news for investors. In addition to the increase to deliveries, Boeing raised its core earnings per share guidance for 2014 to between $7.15 and $7.35, up from $7.00-$7.20. Further, overall revenue increased 8% despite a loss in defense revenue, operating cash flow increased to $1.1 billion, and Boeing reported $19 billion in net orders during the quarter. Plus, with a backlog of $440 billion, Boeing's future looks solid. However, investors would do well to continue monitoring Boeing's deliveries. Right now, deliveries are going well, and providing Boeing with significant profits. But, that's not a guarantee that deliveries will continue to go smoothly. So, while there's not cause to worry right now, it's still something investors should keep an eye on.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks, like Boeing, simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.


Katie Spence has no position in any stocks mentioned. The Motley Fool owns shares of Lockheed Martin. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information