Is Boeing Enticing After Recent Headlines?

With shares of Boeing (NYSE:BA) trading around $129, is BA an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Boeing is an aerospace company. It focuses primarily on engineering, information technology, research and development, test and evaluation, technology strategy development, environmental remediation management, and intellectual property management. The company operates in five segments: Commercial Airplanes, Boeing Military Aircraft, Network & Space Systems, Global Services & Support, and Boeing Capital Corp.

A recent filing with the Federal Communications Commission has shown that Boeing is moving forward with its plans to make an ultra-high tech smartphone that seems like something out of a spy movie. The device, which is being called “Boeing Black,” will run on a variation; be able to support all the major communications, storage, and wireless standards; and will self-destruct if tampered with. The device also uses dual SIM cards to switch between secure and public networks — but not too much more is known about device. The company has even gotten the specs for the device exempt from the Freedom of Information Act, so journalists aren’t allowed to know many details about the phone. Boeing says that the device’s specs are “trade secrets” vital to national security and so can’t be shared with the public.

“Boeing has developed its Black phone primarily by governmental agencies and their contractors to ensure that data and voice communications undertaken by their respective employees are transmitted and store in a highly secure manner,” Boeing said in its filing. Anyone who buys a Boeing Black will have to sign a non-disclosure agreement promising not to reveal the phone’s secrets. “The Boeing Black phone is manufactured as a sealed device both with epoxy around the casing and with screws, the heads of which are covered with tamper proof covering to identify attempted disassembly. Any attempt to break open the casing of the device would trigger functions that would delete the data and software contained within the device and make the device inoperable,” Boeing said of a function that sounds like something out of a Bond film.

T = Technicals on the Stock Chart Are Mixed

Boeing stock has been pulling back in recent times. However, the stock is currently surging higher and looks poised to continue. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Boeing is trading between its rising key averages which signal neutral price action in the near-term.

BA

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Boeing options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

Boeing options

22.78%

0%

0%

What does this mean? This means that investors or traders are buying a very small amount of call and put options contracts, as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

March Options

Average

Average

April Options

Average

Average

As of today, there is an average demand from call and put buyers or sellers, all neutral over the next two months. To summarize, investors are buying a very small amount of call and put option contracts and are leaning neutral over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Boeing’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Boeing look like and more importantly, how did the markets like these numbers?

2013 Q4

2013 Q3

2013 Q2

2013 Q1

Earnings Growth (Y-O-Y)

28.77%

11.85%

11.02%

18.03%

Revenue Growth (Y-O-Y)

6.65%

10.61%

9.05%

-2.53%

Earnings Reaction

-5.33%

5.33%

-0.77%

3.00%

Boeing has seen increasing earnings and revenue figures over the last four quarters. From these numbers, the markets have been pleased with Boeing’s recent earnings announcements.

P = Average Relative Performance Versus Peers and Sector

How has Boeing stock done relative to its peers, Lockheed Martin (NYSE:LMT), Spirit Aerosystems (NYSE:SPR), Northrop Grumman (NYSE:NOC), and sector?

Boeing

Lockheed Martin

Spirit Aerosystems

Northrop Grumman

Sector

Year-to-Date Return

-4.87%

9.80%

-14.90%

6.11%

-1.96%

Boeing has been an average performer, year-to-date.

Conclusion

Boeing is an aerospace company and provider of aircrafts and related products and services to corporations and governments worldwide. The company is moving forward with its plans to make an ultra-high tech smartphone that seems like something out of a spy movie. The stock has been pulling back in recent times, but is currently surging higer. Over the last four quarters, earnings and revenue figures have increased, which has pleased investors. Relative to its peers and sector, Boeing has been an average year-to-date performer. Look for Boeing to continue to OUTPERFORM.

Using a solid investing framework such as this can help improve your stock-picking skills. Don’t waste another minute — click here and get our CHEAT SHEET stock picks now.

More From Wall St. Cheat Sheet:

More from The Cheat Sheet