As of Tuesday’s close, shares of Boeing Co. (NYSE: BA) have added 53% for the year to date, far outdistancing second-place Apple Inc. (NASDAQ: AAPL), which has gained a not-unimpressive 39.6% so far, among the 30 stocks that comprise the Dow Jones Industrial Average (DJIA). On the day Boeing reported second-quarter earnings, the stock shot up nearly 10%.
Boeing’s secret is cost control. In the second quarter, revenues were down 10% year over year, but costs were down by more than twice as much. The company has invested heavily in automation and trimmed its employee total by more than 2,000 workers.
The result was operating cash flow of $4.95 billion in the second quarter and a total of $7 billion for the first half of the year, well above the $4.47 billion in cash flow in the same quarter a year ago.
Boeing stock is the most heavily weighted of the 30 stocks that comprise the DJIA, accounting for 7.45% of the index average. The second-most heavily weighted stock is Goldman Sachs Group Inc. (NYSE: GS), at 7.08% of the Dow’s total.
For the year to date, the Dow is up 11.3%, Boeing is up 53% and Goldman Sachs is down nearly 5%. The remainder of the five most heavily weighted Dow stocks are 3M Co. (NYSE: MMM) (up 16% year to date), UnitedHealth Group Inc. (NYSE: UNH) (up 21.5%) and Apple (up 39.5%). These five stocks combined account for just over 32% of the DJIA.
But the big dog has been Boeing, and the company shows every sign of being able to continue its run at the top of the Dow class. Boeing raised its full-year adjusted earnings per share forecast by about 6% at the midpoint of a new range of $9.80 to $10.00 per share, and the company still expects to deliver 760 to 765 new commercial jets this year.
Operating cash flow guidance was raised from $10.75 billion to $12.25 billion, and Boeing cut its capital expenditure estimate by $300 million.
On top of all that, Boeing accumulated 571 new orders and commitments at June’s Paris Air Show on the strength of new orders for the 737-10. The company’s backlog rose to $424 billion for the company’s commercial jets.
In morning trading Wednesday, shares were up about 0.4% at $240.23, in a 52-week range of $126.31 to $246.49. The consensus 12-month price target is $250.15. The stock traded at 22.33 times forward earnings on Tuesday.
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