The Boeing Company (BA), Lockheed Martin Corporation (LMT): Who Will Win the Dogfight of Carbon-Composite Aircraft?

A company with a high ROE is more likely to be one that is capable of generating cash internally, as is the case with Lockheed Martin Corporation (NYSE:LMT). Lockheed Martin’s high ROE metric is due to the efficient use of equity available i.e. an investment made in a high-tech military jet, as was the case with F-22 Raptor and most recently F-35, has always been initiated by the state’s requirement for a new aircraft. This in turn, grants access to government backed buyers which are willing to pay a premium price for the unique aircraft.

Undoubtedly, Lockheed Martin Corporation (NYSE:LMT) has superseded its rivals due to terrific performance over the past 3 quarters. It has strong financials and an unparalleled standing in the industry. However, looking ahead to the remainder of 2013, and 2014 – its product sales and cash flow do not look as galvanizing as, say – EUROPEAN AERONAUTIC (OTCMKTS:EADSY). The company’s Airbus division has timed the launch of A350 to perfection, since its primary rival The Boeing Company (NYSE:BA) has hit troubles with its directly competing aircraft – 787 Dreamliner. The company has already notched up 678 orders for the A350, while sales of smaller A320 , A320neo jets and the company’s flagship A380 continue to remain strong.

Verdict

EUROPEAN AERONAUTIC (OTCMKTS:EADSY) looks overpriced compared to its peers at the moment, but a very successful audition of its new air craft at The Paris Air Show and continued sales of its other aircraft make it a primary contender for a stellar 2^nd half of 2013 and 2014. Based on the company’s sales, earnings and cash flow potential, EUROPEAN AERONAUTIC (OTCMKTS:EADSY) is a strong buy.

The article Who Will Win the Dogfight of Carbon-Composite Aircraft? originally appeared on Fool.com.

Awais Malik has no position in any stocks mentioned. The Motley Fool owns shares of Lockheed Martin Corporation (NYSE:LMT). Awais is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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