Despite the defense industry’s typically moderate growth, defense stocks often offer stability due to long-term government contracts. Recent legislative developments, such as proposed increases in military spending for fiscal year 2022, signal potential tailwinds for companies like EADSY and BA. These budgetary increases, coupled with government initiatives to modernize military equipment and ongoing technological advancements, are expected to stimulate growth within the defense sector, benefiting both Airbus and Boeing.
Stock Performance and Recent Trends
Analyzing recent stock performance provides initial insights for an eadsy compare assessment. EADSY has demonstrated stronger market performance recently, with a 16.6% price increase over the past nine months and a 20.4% gain year-to-date. Boeing (BA), while still showing growth, lagged behind with an 8% and 4.9% return respectively during the same periods. Over the last six months, EADSY further outperformed BA, posting a 14.4% gain compared to Boeing’s negative returns. This momentum suggests a current market preference for EADSY, but a deeper dive is needed to understand if this trend reflects fundamental differences or short-term market fluctuations.
To ascertain which stock presents a more compelling investment opportunity, we need to examine several key areas, including recent developments, financial results, profitability, and valuation metrics.
Recent Operational Highlights
For Airbus (EADSY), a significant recent development is the launch of Airbus Scale in November 2021. This innovation unit is designed to foster corporate innovation, engage with startups, and build new company ventures. Airbus Scale aims to bolster Airbus’s recovery and drive future growth, particularly in zero-emissions technologies and programs, aligning with global sustainability trends and future-oriented market demands.
Boeing (BA) has been actively showcasing its diverse portfolio at the 2021 Dubai Airshow. This included the debut of the 777X, its latest fuel-efficient widebody jet, and highlighting advancements in autonomous capabilities like the Boeing Airpower Teaming System. These activities underscore Boeing’s ongoing efforts in innovation and market presence, particularly in the commercial and defense sectors.
Financial Performance: A Comparative Look
Reviewing recent financial results is crucial for an effective eadsy compare analysis. Airbus (EADSY) reported a 17% year-over-year revenue increase to €35.20 billion ($40.71 billion) for the nine months ending September 30, 2021. Significantly, the company turned a net loss from the previous year into a net income of €2.64 billion ($3.04 billion). Earnings per share (EPS) also reflected this positive shift, reaching €3.36 compared to a €3.43 loss in the same period last year.
Boeing (BA) also showed financial improvement, with revenues increasing by 10.8% year-over-year to $47.49 billion for the same nine-month period. Boeing substantially reduced its net loss by 96.4% to $126 million, and loss per share decreased by 98.4% to $0.10. While both companies demonstrate financial recovery and growth, Airbus’s return to profitability is a key differentiator in this eadsy compare assessment.
Future Revenue Expectations
Looking ahead, analyst revenue forecasts offer insights into potential growth trajectories. Analysts predict an 11.9% revenue increase for EADSY in the next quarter and a 14.4% increase next year. Boeing is expected to experience more robust revenue growth, with forecasts of a 37.5% increase in the next quarter and 34.5% next year. The higher projected growth for Boeing suggests a potential for rapid recovery and expansion, although it’s crucial to consider the context of Boeing’s recent challenges and recovery phase.
Profitability Metrics: EADSY Leads
Profitability is a critical factor in this eadsy compare analysis. Airbus (EADSY) demonstrates superior profitability compared to Boeing. EADSY’s trailing-12-month revenue is approximately 1.01 times that of Boeing, indicating comparable sales volume. However, EADSY’s EBITDA and net income margins stand at 14.03% and 7.63% respectively, while Boeing reports negative values for both metrics.
Furthermore, Airbus’s Return on Assets (ROA) and Return on Total Capital (ROTC) are 3.24% and 16.33% respectively, contrasting sharply with Boeing’s negative ROA and ROTC. These figures clearly establish Airbus as the more profitable entity, indicating more efficient operations and better earnings relative to its assets and capital.
Valuation Comparison
Valuation metrics offer another dimension to the eadsy compare analysis, particularly in assessing stock affordability. Using the forward Enterprise Value to Sales (EV/S) ratio, Boeing is currently trading at 2.66x, which is 58.3% higher than Airbus’s 1.68x. Similarly, Boeing’s forward EV/EBITDA ratio is significantly higher at 40.39x compared to Airbus’s 12.41x, a 225.5% difference. These valuation ratios suggest that, based on forward sales and earnings, EADSY is considerably more affordable than BA.
POWR Ratings and Industry Ranking
The POWR Ratings system provides an objective, data-driven assessment of stock quality. EADSY holds an overall rating of C, categorized as Neutral, while Boeing is rated D, indicating a Sell. These ratings are derived from 118 distinct factors, each weighted for optimal predictive power.
In terms of specific grades, EADSY receives a B for Value, aligning with its lower forward EV/S ratio compared to the industry average. Boeing, conversely, has a C grade for Value, consistent with its higher EV/S ratio relative to the industry. Regarding Quality, EADSY earns a C grade, supported by its higher CAPEX/Sales ratio compared to the industry average. Boeing’s Quality grade is D, reflecting a lower CAPEX/Sales ratio than the industry benchmark.
Within the Air/Defense Services industry, EADSY is ranked #23 out of 71 stocks, while Boeing is ranked #56, further indicating EADSY’s stronger position within the sector according to POWR Ratings.
Conclusion: EADSY or BA?
The aerospace and defense industry is poised for growth, driven by increased government spending. However, current analysis suggests neither EADSY nor BA are optimally positioned as strong buy recommendations right now. While EADSY presents a more attractive profile based on valuation and profitability metrics in this eadsy compare analysis, it might still be prudent for investors to await a more favorable entry point.
Although EADSY appears to be the stronger candidate between the two, considering its superior profitability, valuation, and POWR Rating, prudent investors may consider exploring stocks with stronger overall ratings, such as “Strong Buy” or “Buy,” for potentially higher returns. Further research into top-rated stocks within the Air/Defense Services industry is advisable for those seeking immediate investment opportunities with stronger growth potential.
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Author: Nimesh Jaiswal
Nimesh Jaiswal is a financial analyst and journalist passionate about interpreting financial data to inform investment decisions. His approach emphasizes the crucial role of financial statements in stock price dynamics. More about Nimesh Jaiswal
Stock Resources
| Ticker | POWR Rating | Industry Rank | Rank in Industry |
|---|---|---|---|
| EADSY | Get Rating | Get Rating | Get Rating |
| BA | Get Rating | Get Rating | Get Rating |
