The Boeing Co. Suffers a Strategic Blow; General Electric Gears Up for Q2 Report

The Boeing Company is in a heated race for sales with rival Airbus, and the latter launched a major upgrade this week. Meanwhile, General Electric is gearing up to report its second-quarter earnings tomorrow.

Jul 17, 2014 at 3:00PM

The Dow Jones Industrial Average (DJINDICES:^DJI) is down 76 points as of 2:30 p.m. EDT following reports that a Malaysian passenger jetliner has been shot down in Ukraine near the Russian border after the U.S. and EU imposed new sanctions on Russia. With details still emerging on the downed airliner, the market had economic news to digest as well.

Initial unemployment claims fell more than expected last week to 305,000, which is the latest sign of a slowly but surely improving labor market. On another positive note, Thomson Reuters data shows that more than 68% of the 66 S&P 500 companies that have reported earnings through Thursday morning have topped Wall Street expectations. For context, 63% of companies on average have beaten expectations since 1994. 

With all of that in mind, here are a couple of industrial companies making the headlines in the markets today.

Inside the Dow, Boeing (NYSE:BA) was dealt a blow from European rival Airbus Group (NASDAQOTH:EADSY) at the Farnborough International Airshow. Airbus launched a major upgrade of its A330 long-range jet, which directly competes with Boeing's 787 Dreamliner. Airbus took a gamble, hoping that its $1.36 billion to $2.71 billion investment -- chump change compared to the cost of developing a complete aircraft -- to upgrade the A330 with new Rolls-Royce PLC engines would generate 14% gains in fuel-efficiency.


Boeing has landed its fair share of orders this week. Source: Boeing

Airbus' move to re-engine the plane will enable the aircraft manufacturer to lower the price substantially on its A330 as it competes with Boeing's more expensive 787 Dreamliner.

When speaking of the development to The Wall Street Journal, John Leahy, chief salesman for Airbus' commercial-plane unit, had this to say: "I think they are caught between a rock and hard place. What they basically can't get their heads around is how we did it and how they can answer it."

Boeing and Airbus are locked in a heated battle, and investors would be wise to keep an eye on orders tallied at the end of the week during the Farnborough airshow to better understand sales momentum between the two rivals.

Also inside the Dow, General Electric (NYSE:GE) is gearing up to release its second-quarter report Friday. Analysts are expecting the industrial conglomerate to post earnings of $0.39 per share on revenue of $36.3 billion. Those expectations reflect respective increases of 8.3% and 3.4% compared to last year. 

There looks to be a substantial amount of information for investors to digest during General Electric's conference call: the large Alstom deal and its details, a soon-to-be spin-off of GE Capital's North American retail finance, and more. Investors will also be taking a magnifying glass to GE's industrial business, which is continuing to expand as the company refocuses on its core businesses, rather than GE Capital and finance business.

One important piece of information that investors should look for is whether GE is making progress to improve its operating margins. GE plans to improve its operating margins to 17% in 2016, a 130 basis-point improvement from 2013's 15.7%.

Another important figure for investors to watch will be General Electric's order backlog, which was at $245 billion at the end of the first quarter. Though orders from the Farnborough International Airshow won't be added into the figure until the third quarter, it's clear GE's products remain in demand, and the company's order backlog will fuel revenue growth in the short term. 

Dividend stocks like Boeing and GE can make you rich! Here's more top dividend stocks, Free
The smartest investors know that dividend stocks 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.

Daniel Miller has no position in any stocks mentioned. The Motley Fool owns shares of General Electric Company. 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