Boeing(BA) The Motley Fool·2025-03-26 08:06Core Viewpoint - Boeing has secured a significant contract from the Department of Defense, leading to a 3.1% increase in its stock, while Lockheed Martin's stock fell by 5.8% due to losing the contract [1] Boeing - Boeing has faced numerous challenges over the past five years, including the suspension of its dividend in March 2020 due to the COVID-19 pandemic and issues with the Boeing 737 Max, including a recent investigation revealing quality control problems [3][5] - The company anticipates a ramp-up in new aircraft versions and expects to reduce losses in its Defense, Space & Security segment, guiding for positive free cash flow (FCF) in the second half of 2025 [4] - Boeing's backlog has grown significantly, reaching 4.23 starting in 2026, making the stock potentially attractive if the company can manage its backlog effectively [6] Lockheed Martin - Lockheed Martin is characterized by its profitability and a consistent dividend increase for 22 consecutive years, with a valuation of less than 20 times trailing earnings and free cash flow [7] - The company has experienced weak growth recently, highlighted by a disappointing quarter and guidance, leading to a 9.5% decline in stock year-to-date [8][9] - Lockheed's adjusted EPS guidance for 2024 is between 27.30, with a projected EPS of $29.75 in 2026, indicating modest growth of 6.3% compared to 2024 [9] - Unlike Boeing, Lockheed has a strong track record of managing its backlog and delivering profitable programs, such as the F-35 fighter jet [10] Investment Considerations - The choice between Boeing and Lockheed Martin depends on investment objectives and risk tolerance; Boeing presents higher risk with potential for greater rewards, while Lockheed offers stability and consistent dividends [11][12] - Boeing's balance sheet is weaker than Lockheed's, with a financial debt-to-equity ratio of 0.4 and a debt-to-capital ratio over 100%, suggesting a need for financial improvement before reinstating dividends [13]