For those interested in adding aerospace exposure, there are Of the two, it's hard to say which stock will perform better over the next year or two. Boeing is likely the better bet for a true "buy and forget about it" investment with a multidecade time frame, but I'm worried Stock Advisor launched in February of 2002. Market data powered by
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.The COVID-19 pandemic, and the travel slump that has followed, is threatening to upend that success.
Image source: Airbus.Airbus arguably has the more complete lineup of commercial aircraft, thanks in part to its Airbus' $11 billion defense business has historically been more of an afterthought than the Boeing Defense unit. But investors should be aware that the German, French, and Spanish governments still control about 25%, combined, of the company's stock.To be honest, I have no desire to invest my money in either of these stocks right now. In the last 18 months, Boeing has scored a series of wins, including a $9.2 billion contract Airbus, like Boeing, has in recent years leaned heavily on its swelling commercial order book. It also will likely have more freedom to right-size its business as necessary compared to its European rival.On the other hand, Boeing (due to the 737 MAX fiasco) has limited leverage with its customers who want to defer deliveries or negotiate new terms. The company, once known as European Aeronautic Defence and Space, has in recent years asserted its independence after years of criticism that it acted at the whim of European governments. And Boeing's balance sheet is badly bruised after the company spent most of 2019 supporting its supply chain as the 737 MAX drama played out.Boeing strikes me as the higher-risk, but potentially higher-reward, stock over the coming years. The company is an amalgamation of European aerospace companies pushed together in the 1970s to better compete against U.S. giants. Airbus Defence has a steady stream of revenue-generating contracts but appears to lack an innovative new potential platform that could move the needle in years to come.The case for Airbus over Boeing is built around Airbus' more mature product line, which doesn't have the same risks as the 737 MAX and the 777X, and which should be a cash machine over the next few years.
Regulators are unlikely to move quickly toward recertification, and even after regulators give the plane the all clear to fly again, there is likely to be intense scrutiny on new deliveries that have been sitting parked for months, which will slow the delivery timetable.At best the 737 MAX program is back at its pre-accident pace by mid-year 2020, but Boeing seems unlikely to follow through with its planned production boost from 42 frames per month to 52, and eventually 57, as quickly as it would have hoped. View real-time stock prices and stock quotes for a full financial overview. Find the latest AIRBUS (AIR.PA) stock quote, history, news and other vital information to help you with your stock trading and investing. Its A320 was a beneficiary of the 737 MAX's woes, although Airbus' wait list for the A320 was so long already that airlines found it hard to switch on the fly. Between now and 2022, much of the cash that is generated from the Airbus backlog should fall straight to the bottom line at a time when Boeing is focused on research and development and compensation for 737 MAX issues.Although there is the threat of new commercial aerospace competition coming from China, for the foreseeable future Boeing and Airbus largely enjoy a lucrative duopoly in airplane sales with a viable moat given how capital intensive and technically demanding this industry is. Airbus over the next three to five years seems poised to outperform Boeing based on the expected expansion of free cash flow as it ramps up deliveries, which should help it to narrow a valuation gap that currently has Airbus shares trading at less than half Boeing's multiple to earnings and about 40% below Boeing's multiple to sales. Investors who put money into Boeing today and are patient through an extended cycle will probably come out significantly ahead. Returns as of 07/31/2020. Here's a look at the two aerospace giants to determine which, if either, is the better buy today.Boeing was a mess even before the pandemic, troubled by issues with its 737 MAX and other signature programs.