Boeing’s Downbeat 2013 Earnings and Revenue Forecast Is Met With A Rising Share Price: More Evidence That Mr. Market Is In His Manic Phase

Boeing is out with Q4 earnings this AM.  It offered guidance for earnings for 2013, assuming the problems with the 787 Dreamliner are resolved in a reasonable time frame.  Projected revenues for 2013 are $83.5 B, well below published analysts’ estimates of $87.9 B (note typo in LINK).  Projected earnings of $5.10 are below consensus of $5.16.  (I am giving the midpoint of Boeing’s ranges for its guidance.) Boeing did “beat” on earnings for Q4, though sales were in line.  No pro cares about “beats” anymore, because almost every major company “beats”.  After all, the company earning $1.83 in Q4 of 2011, so it’s a long way down yoy.

Yet even though revelations that are not positive for Boeing about its next-generation 787 are coming out frequently (LINK to the latest from Reuters), thus increasing both “headline” and financial risk to the company, the stock just holds in there.

This is today’s market.  

In what I view as an historically normal market, reasonable downward price adjustment would usually have occurred based on the Dreamliner fiasco and today’s downbeat sales forecast, which (I repeat) includes projected sales of numerous 787′s.  Yet BA just keeps hanging in there.

Boeing was a hot IPO in the late 1920s.  Given its cyclicality, operational and headline risk, underfunded pension plan, lack of share shrinkage via buybacks, and that it likely is not a takeover candidate, I’d expect it would be more fairly valued at a 4% dividend yield rather than today’s 2.60%.

That the stock keeps on hanging in there raises the question of whether Mr. Market has swung from depression in 2009 (when he marked stock prices down due to a minor flu epidemic) into a manic phase.

 

EmailPrintFriendlyShare

1 comment to Boeing’s Downbeat 2013 Earnings and Revenue Forecast Is Met With A Rising Share Price: More Evidence That Mr. Market Is In His Manic Phase

  • eric

    Speaking of manipulated markets since spring of 09′. Has anyone looked at Norfolk Southern’s shipping cars and it’s stock price?

    In 2007 at the peak of the economic cycle, NS had over 207,000 cars and the stock price was in the 30′s. They have never shipped as much stuff since and the stock has gone up every year.

    The market is completely manipulated and bears no relationship to the REAL economy. Hence the small investor is out of the market.