Every Thursday, every week, Boeing (NYSE:BA) updates investors on the status of its airplane orders. May was pretty sleepy for the aerospace giant, so we let most of these recent updates slide by without comment. But the first week of June brought us the monthly order update from Airbus (NASDAQOTH:EADSY) as well.
That makes today a great time to run a quick comparison of these two plane-making goliaths.
Updating the numbers
For its part, Boeing confirmed that through the final week of May it had booked plane orders for:
- 90 single-aisle 737s (10 more than the previous month)
- 45 new "Dreamliner" 787s (also up 10)
- 25 units of the 777 (a five-plane increase)
- four 747 jumbo jets (up one)
- one 767 (unchanged from the end of April)
Tally those up, and it makes for 165 "gross" plane orders received year to date, and a 26-plane increase from Boeing's order book at the end of April. After cancellations, Boeing's "net" new orders for the year stood at 136 -- up 22 from April.
Airbus lags behind ... this time
Airbus, meanwhile, reported that in May it booked orders for "18 A320 Family aircraft." At first glance, this sounds like bad news for Boeing's European archrival -- but hold on. Digging deeper into the report, Airbus also mentioned that it had net orders of 225 planes year to date. Specifically:
- 212 single-aisle jets from the aforementioned "A320 Family" (including a tiny A318 and two A319s)
- 35 wide-body A330s, which compete with Boeing's 767, 777, and 787
- Precisely zero A350s and A380s.
At the the time of the report, Airbus had suffered only 22 cancellations so far this year, resulting in that net tally of 225 new plane orders for the year. So to sum up, Airbus sold fewer planes than Boeing did in May. But over the course of the year, Airbus has sold more planes, and experienced fewer order cancellations, and as a result had an order book 65% bigger than Boeing's!
What it means to investors
Near the halfway mark for the year, Airbus looks to be en route to repeating its feat of 2014, when the company eked out a small victory over Boeing, netting 1,456 plane orders against its rival's net of 1,432. Airbus is raking in more orders, and has a firmer grip on those orders, losing fewer to cancellation than Boeing.
And yet, according to data from S&P Capital IQ, Airbus' stock is arguably cheaper than Boeing's. Valued on profits, Boeing and Airbus are neck-and-neck with identical P/E ratios of 17.7. But valued on sales, Airbus's P/S ratio of 0.8 is 26% cheaper than Boeing's 1.1 P/S ratio.
Presumably, this is because with a 4.6% operating profit margin over the past 12 months, each Airbus revenue dollar brings in less profit than an equivalent dollar of sales from Boeing (where operating profit margin is 8.3%). But if Airbus keeps beating Boeing on sales, and showing greater customer loyalty as well, that valuation gap could get smaller.
As shocking as it is to write this, Airbus stock just might be a better bargain than Boeing today.