Is Boeing a Buy After Worker Strike?

By Douglas A. McIntyre Published Sep 13, 7:10AM EDT

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Boeing Co. (NYSE: BA | BA Price Prediction) shares have sold off because of a new worker strike.
Investors have to decide if they think the worst is behind the aerospace giant now.
Also: Dividend legends to hold forever.

Boeing Co. (NYSE: BA) shares have sold off because of a worker strike. International Association of Machinists and Aerospace Workers members walked out of Boeing’s massive site in Seattle. Over 30,000 workers are part of the action.

The factory assembles Boeing’s popular 737 Max and its 777 and 767 aircraft. If the action is prolonged, it will affect revenue. The question is whether Boeing’s safety issues and the strike will cause the stock to bottom and whether the shares will climb when one or both issues are resolved. The worker contract is expensive. The union wants a wage increase of 40% over three years.

Boeing’s stock is down 37% this year, while the S&P 500 is 17% higher. It trades near its four-year low.

On top of the strike, the door blew off a 737 Max 9 in January while flying 14,000 feet above sea level. Investigators said the bolts that held the door had not been installed correctly. The incident led to an investigation, which made it clear that Boeing had assembly quality issues.

The air door incident and subsequent investigations cost CEO David L. Calhoun his job in March. Robert “Kelly” Ortberg, former CEO of supplier Rockwell Collins, became Boeing chief executive in August. Experts agreed that it would take months, or even years, to turn the company around by getting the confidence of carriers and the flying public. Boeing is bleeding billions of dollars of losses per quarter.

The company’s problems worsened recently. A Boeing Starliner spacecraft took two astronauts to the International Space Station, but safety questions about the spacecraft prohibited its use to return them.

So, have all these problems driven Boeing stock to a bottom? If investors want to take the risk that the worst is behind the company, they may want to also risk a part of their portfolios.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.