airfrnt
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Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 7:42 am

Has anyone noticed that the bottom seems to have dropped out of the EADS stock? Check out:
ISG_SYMBOL=PEAD.PSE&ACTIVE=PSE&TYPE=1" border=0>

What is the reason behind this? It's lower then last September/October when Airbus announced their third A380 delay, and almost as bad as may, when Airbus announced the second delay. Big contract rumored to be awarded to someone else, investor concern over power 8? I doubt that the Aeroflot order and the Chinese Southern orders would be enough to have this drastic of a effect.

Is there bad news lurking in the wings?
 
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Revelation
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 7:52 am

Sorry, I don't know, but it's an interesting picture.

Makes me wonder at what price Forgeard et al sold at.
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EMBQA
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 7:56 am

Quoting AirFrnt (Thread starter):
What is the reason behind this?

Well... they have invested millions into a product that no one seems to be buying..?
"It's not the size of the dog in the fight, but the size of the fight in the dog"
 
boeingbus
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 8:05 am

It's probably under valued and if you are risk taker its probably a good bet for your portfolio... look BA whose stock price was in the low 20's only several years ago...

you may see doom but others may see an opportunity....

cheers
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Lumberton
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 8:30 am

Well, the stock is up 2% today. A lot of the decline seems to have broadly followed general market trends. Nonetheless, it is down since Paris. However, so is Boeing and Embraer!

I've never been able to peg this stock's movements with bad or good news, with the obvious exception of the A380 delays last year. Just when I think it'll tank, it moves up; likewise, when market conditions seem to favor buying, the thing drops (i.e., since the beginning of the Paris Airshow). EAD.PA is somewhat of a mystery.
"When all is said and done, more will be said than done".
 
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mariner
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 8:32 am

You don't think it has something to do with the massive correction that has been happening on the world stock markets these past few weeks?

The EADS stock chart looks (to me) fairly similar to the DAX (German index):

http://iracs.isg.de/eads/2005/chart_...X.ETR&TYPE=1&CTYPE=0&AVG1=0&AVG2=0

The fall-off in EADS may be slightly greater - perhaps because EADS is more dependant on the availability of credit to its customers?

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AirNZ
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 10:07 am

Quoting EMBQA (Reply 2):
Well... they have invested millions into a product that no one seems to be buying..?

What product would that be?
Flown:F27/TU134/Viscount/Trident/BAC111/727/737/747/757/767/777/300/310/320/321/330/340/DC9/DC10/Dash8/Shorts330/BAe146
 
747fan
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 10:18 am

Quoting AirNZ (Reply 6):
What product would that be?

A certain plane that resembles a whale... duck 

It definitely has bottomed out since last year which is definitely due to the somewhat slow-selling A380, although remember that the 747 started out slow back in the early '70's. The rest after that is history. The A350 has been slow-selling as well, but the US order is definitely a big boost and some other customers have also ordered the A350 or are interested.
 
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 11:02 am

Quoting Mariner (Reply 5):
You don't think it has something to do with the massive correction that has been happening on the world stock markets these past few weeks?

The EADS stock chart looks (to me) fairly similar to the DAX (German index):

Comparing to the S&P, the drop appears to start somewhat early and appears to be steeper. Compared to Boeing, the drop starts way earlier.
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TKV
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 11:04 am

Quoting Mariner (Reply 5):
You don't think it has something to do with the massive correction that has been happening on the world stock markets these past few weeks?

Not too much. The market correction a by today, from June 15 (begin Paris show) was only 3% in the US
and 6% in Europe. If we look at the Boeing stock in relation to EADS, it increased 12%. EADS fell 13%, whilst the European markets as said only 6%

The reasons of such decline I will address them separately, essentially there are the lack of confidence both in EADS and Airbus, the perception, that they are trying to resolve the problems with band-aids, as political and union interests stop the really needed measures and the fact, that the M&S policy not only do not achieve the necessary margins, but incur in huge risks. This being the reason why announcement of large orders by potentially risky customers show no effect on the stock price

To visualize the Market evolution from the beginning of the Paris show (Delta = Increment)

-------------Symbol-------June 15---Aug.20----Delta--------Delta over market--------Delta over EADS

DJI INDEX----------------13,550----13,120------(3)%
DJ STOXX INDEX--------3,900-----3,658------(6)%
EADS---- EAD.PA----------23.3------20.2-----(13)%-----------------(8%)--------------------------N.A.
BOEING--------BA----------- 98-------- 97-------(1)%-----------------+2%------------------------+12%

TKV

.
 
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mariner
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 11:14 am

Quoting Atmx2000 (Reply 8):
Comparing to the S&P, the drop appears to start somewhat early and appears to be steeper.

The recent correction has timed differently for many stocks around the world. And currencies.

http://iracs.isg.de/eads/2005/chart_...8.DJX&TYPE=1&CTYPE=0&AVG1=0&AVG2=0

Certainly the EADS drop is steeper, as I said, but the chart is very similar to the DAX and the DJ Aerospace.

The uptick matches them, too.

mariner
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airfrnt
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 12:25 pm

Quoting Mariner (Reply 5):
You don't think it has something to do with the massive correction that has been happening on the world stock markets these past few weeks?

Nope. Boeing is only a few points off of it's all time high, and long term manufacturing like this will be affected, but usually well after a slow down has occurred, not before.

Quoting Mariner (Reply 5):
The fall-off in EADS may be slightly greater - perhaps because EADS is more dependent on the availability of credit to its customers?

It's probably credit related, but it perhaps has more to do with how they have their hedging set up then a restricted credit access. Airbus doesn't have Boeing's credit, but it's not bad in and off itself. I think most of the corporate consumer watchdogs have EADS on alert, but no downgrades have occurred which would reflect a lack of access to capital.
 
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 1:11 pm

Quoting Revelation (Reply 1):
Makes me wonder at what price Forgeard et al sold at.

E32.01 on 16th. March 2006.
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mariner
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 1:12 pm

Quoting AirFrnt (Reply 11):
Nope.

Okay.

For myself, I find it tough to think it is a coincidence that the chart so similarly mirrors many major indices, together with the extraordinary correction has been happening on the world markets, and to several currencies. The rise and fall of the Kiwi dollar has been a roller coaster for me.

But - each to their own, always.

Quoting AirFrnt (Thread starter):
Is there bad news lurking in the wings?

Who knows? But then it seems odd that the share traders would know about it, and no one else.

mariner
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NAV20
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 1:28 pm

Apparently EADS stock dropped sharply on Friday on press reports that Voith was looking at possibly buying three EADS plants (including the Augsburg one that EADS has not yet finally decided to sell):-

"LONDON (Thomson Financial) - Voith, one of Germany's largest privately-held industrial groups, is interested in buying three of Airbus' German factories that are up for sale, the Financial Times reported without naming sources.

"The group is interested in the Varel and Nordenham plants as well as Augsburg, which Airbus' parent EADS said last week for the first time it is considering selling. Voith is not expected to bid for the fourth German factory at Laupheim."


http://www.forbes.com/business/feeds/afx/2007/08/17/afx4029328.html

Some investors may not be happy in principle with the idea of hiving off plants (and therefore future profits). Alternatively, they may not be happy with the prospect that a lot of them might be bought by a single (privately-owned) firm.
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ikramerica
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 2:37 pm

Quoting Mariner (Reply 5):
The fall-off in EADS may be slightly greater



Quoting Atmx2000 (Reply 8):
Comparing to the S&P, the drop appears to start somewhat early and appears to be steeper. Compared to Boeing, the drop starts way earlier.



Quoting Mariner (Reply 13):
But - each to their own, always.

But while it "mirrors" it, it's by a factor of 2-4x! That isn't explained by the correction in general. But since the correction hit "risky" investments most, what it does say is EADS was riskier than the DAX, S&P, DJ Transportation Index, and Boeing in comparison.

Why should that be dismissed? If EADS were just performing like everyone else, it would be down 3-6%, or everyone else would be down 12% like EADS...
Of all the things to worry about... the Wookie has no pants.
 
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mariner
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 3:33 pm

Quoting Ikramerica (Reply 15):
what it does say is EADS was riskier than the DAX,

Certainly, it is. Many of the DAX stocks do not have problems of currency conversion, for example.

Quoting Ikramerica (Reply 15):
Why should that be dismissed?

Who's dismissing it? It fell.

As did many blue chip stocks over the past few weeks. Several stock market indices lost 10%. Several moderately important hedge funds went belly up. Many believed a credit crunch looming.

The US Fed thought the crisis was severe enough to lower the interest rate.

So I don't necessarily assume that the fall in price of EADS stock was entirely attributable to what is happening at the company - known or unknown.

mariner
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zvezda
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 4:00 pm

Quoting AirFrnt (Thread starter):
Has anyone noticed that the bottom seems to have dropped out of the EADS stock?

That's an overstatement. EADS' price has fallen by less than half.

The main causes appear to be:
- general softness in the european markets
- lack of confidence that Power8 will be fully implemented, and
- realization that, with 71 net sales in 68 months, the WhaleJet will never come close to break even.

Quoting NAV20 (Reply 14):
Some investors may not be happy in principle with the idea of hiving off plants (and therefore future profits). Alternatively, they may not be happy with the prospect that a lot of them might be bought by a single (privately-owned) firm.

EADS investors would be very unhappy with the prospect of a single entity owning so many plants that would be supplying them. The investors would not want to pay monopoly rents.

Quoting Mariner (Reply 16):
I don't necessarily assume that the fall in price of EADS stock was entirely attributable to what is happening at the company - known or unknown.

The fall in the price of EADS stock is not attributable entirely either to EADS or the general markets. It is clearly a combination of both.
 
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mariner
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 4:24 pm

Quoting Zvezda (Reply 17):
The fall in the price of EADS stock is not attributable entirely either to EADS or the general markets. It is clearly a combination of both.

That is part of the point I was making.

However, these are extraordinary times. Continental Airlines fell 17% in a single day last week.

There was no "bad news" to precipitate it, and there has been none since. No analyst that I have read has been able to explain it.

mariner
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astuteman
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 4:32 pm

Quoting Zvezda (Reply 17):
That's an overstatement. EADS' price has fallen by less than half.

12% during a period of major market turbulence to be precise

Quoting TKV (Reply 9):
The reasons of such decline I will address them separately

Thank goodness - now I can sack my financial advisor  Yeah sure

Quoting Zvezda (Reply 17):

- general softness in the european markets
- lack of confidence that Power8 will be fully implemented, and
- realization that, with 71 net sales in 68 months, the WhaleJet will never come close to break even.

First two sound plausible...
So the markets woke up to the A380 issues THIS WEEK eh?  no 
Try about 2 years ago..............
Still, you can't let a good opportunity go by.........

Quoting AirFrnt (Thread starter):
Is there bad news lurking in the wings?

I'm sure with all the desperate searching, if there is, it'll be found.
If there's no bad news, there's always plan B
Regards
 
zvezda
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 4:52 pm

Quoting Astuteman (Reply 19):
So the markets woke up to the A380 issues THIS WEEK eh? no
Try about 2 years ago..............
Still, you can't let a good opportunity go by.........

EADS has been generally falling for a couple of years now, not just two weeks. The last two weeks manifest a small correction compared to e.g. Spring 2006.
 
airfrnt
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 9:30 pm

Quoting Zvezda (Reply 17):
That's an overstatement. EADS' price has fallen by less than half.

My point is that it is challenging the lows around the 380 announcements. That's despite a huge amount of capital that state banks around the world have been pushing in.

Quoting Astuteman (Reply 19):

I'm sure with all the desperate searching, if there is, it'll be found.

That was uncalled for. I am asking this question as a financial matter. I would ask exactly the same question of Boeing if it's stock was around 20 right now.
 
sabenapilot
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 9:52 pm

One can proof any trend if one takes only a short period; I suggest however you all have a look at this 5 year chart to put the 'low" in perspective:

long term view on EADS share price


[Edited 2007-08-21 15:08:00]
 
cygnuschicago
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 10:39 pm

Quoting Ikramerica (Reply 15):
But while it "mirrors" it, it's by a factor of 2-4x! That isn't explained by the correction in general

Actually, it is - that's probably EADS' Beta, a measure of the stock's sensitivity to market movements. As a standalone stock, EADS currently has a higher risk than the market. So, when we see a certain degree of volatility on the market, EADS will experience Beta-times that volatility.

The underlying question is why EADS hasa high Beta? Well, no one can say for sure, and anyone who can will quickly be a multi-billionaire. However, we can guess. My guesses and line of thinking include:

- There is an expected global economic slowdown approaching, leading to lower yields on airlines
- This will lead to tighter credit, which in turn will hit airline expansion plans really hard
- A lot of Airbus' business is in single-aisle jets for new or expanding careers, while the A330s are mainly interim lift, and as a result these kinds of orders may see deferrals or cancellations in a slowdown
- Boeing, on the other hand, has a fair amount of orders tied up in long term replacement aircraft in the form of the 787 orders, and may thus be less riskier in a slowdown.
If you cannot do the math, your opinion means squat!
 
jacobin777
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 11:46 pm

Quoting Sabenapilot (Reply 22):
One can proof any trend if one takes only a short period; I suggest however you all have a look at this 5 year chart to put the 'low" in perspective:

..sure.. Smile

Comparison with its peers is important..while one stock is up 50% while the other stock is up around 200%



"Up the Irons!"
 
zvezda
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RE: Bottom Falling Out Of Eads Stock?

Tue Aug 21, 2007 11:57 pm

Quoting Sabenapilot (Reply 22):
One can proof any trend if one takes only a short period; I suggest however you all have a look at this 5 year chart to put the 'low" in perspective:

Yes, but to put it in perspective requires comparing it against competitors and against the indices.
 
FAEDC3
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RE: Bottom Falling Out Of Eads Stock?

Wed Aug 22, 2007 12:27 am

Markets had been trying to correct themselves during last week, I think that eventhough EADS stock has shown to be affected as most of the rest blue chips, it has taken the hit quite nicely compared to other industries, This has been a market wide fall. Most A&D stock has levels that are lower than they were 10 days ago, that includes Boeing, General Dynamics, Herley, Lockheed Martin, Northrop among others. Of course there are exceptions, like Hexcel (that was gaining during the fall, but then receded) but I think that we should keep in mind that in the specific case of EADS, this company has many things to do other than Airbus. It is an aerospace company that has many sides exposed to market changes.
 
asteriskceo
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RE: Bottom Falling Out Of Eads Stock?

Wed Aug 22, 2007 12:40 am

Quoting Mariner (Reply 13):
Who knows? But then it seems odd that the share traders would know about it, and no one else.

Not to me. On some occasions the share traders are the first to know.  Wink
 
cygnuschicago
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RE: Bottom Falling Out Of Eads Stock?

Wed Aug 22, 2007 1:02 am

Quoting Jacobin777 (Reply 24):
Comparison with its peers is important..while one stock is up 50% while the other stock is up around 200%

Well, let's put the entire picture down. Five year chart shows what we all know: A380 delays caused market value erosion. Wow. What a surprise!  Yeah sure Now let's take a look at the "bottom falling out of EADS stock", and take a one month view. Very much seems to follow the market trend, in my opinion.
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astuteman
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RE: Bottom Falling Out Of Eads Stock?

Wed Aug 22, 2007 1:16 am

Quoting Zvezda (Reply 20):
EADS has been generally falling for a couple of years now, not just two weeks

Your comments make much more sense, now. Apologies.

Quoting AirFrnt (Reply 21):
I would ask exactly the same question of Boeing if it's stock was around 20 right now.

I'm sure you would. I would too. Boeing has been trading at c. $100 recently. $20 would definitely ring some alarm bells..........

Regards
 
jacobin777
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RE: Bottom Falling Out Of Eads Stock?

Wed Aug 22, 2007 2:10 am

Quoting CygnusChicago (Reply 28):
Five year chart shows what we all know: A380 delays caused market value erosion. Wow. What a surprise!

......the problem with the A380 was roughly 2 1/2 years ago..not five years ago, so I don't get your point.. no 

5 years is a good time from from most points of view...and I was comparing peer-to-peer in the same group (granted I left out Embraer, etc)..also, EADS stock started to trade not too many years ago....

Since its inception in 2000 (formation of the merger), EADS stocks has basically gone nowhere (in other words, I would have been better off had I hypothetically put $10,000 in European treasuries in 2000 versus putting $10,000 in EADS stock)....in the same period, BA's stock is up roughly 80%-90%.

Of course, purchasing EADS stock in early 2003 would have been a great investment, but so would Boeings..

That being said, I think valuation for EADS is looking somewhat attractive, but not enough for me to make a purchase yet..which I would like to....
"Up the Irons!"
 
gbfra
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RE: Bottom Falling Out Of Eads Stock?

Wed Aug 22, 2007 2:27 am

Quoting Jacobin777 (Reply 30):

Since its inception in 2000 (formation of the merger), EADS stocks has basically gone nowhere (in other words, I would have been better off had I hypothetically put $10,000 in European treasuries in 2000 versus putting $10,000 in EADS stock)....in the same period, BA's stock is up roughly 80%-90%.

Long-term comparisons of EADS (quoted in Euros) and Boeing (quoted in Dollars) share prices should include exchange-rate variations. Do they?
The fundamental things apply as time goes by
 
cygnuschicago
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RE: Bottom Falling Out Of Eads Stock?

Wed Aug 22, 2007 2:38 am

Quoting Jacobin777 (Reply 30):
......the problem with the A380 was roughly 2 1/2 years ago..not five years ago, so I don't get your point..

EADS was up 275% when the A380 issues hit. Value hasn't eroded since then. The point is, there is no sinister trend in EADS stock. The market revalued it when the A380 issues became apparent. End of story.
If you cannot do the math, your opinion means squat!
 
jacobin777
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RE: Bottom Falling Out Of Eads Stock?

Wed Aug 22, 2007 2:41 am

Quoting Gbfra (Reply 31):
Quoting Jacobin777 (Reply 30):

Since its inception in 2000 (formation of the merger), EADS stocks has basically gone nowhere (in other words, I would have been better off had I hypothetically put $10,000 in European treasuries in 2000 versus putting $10,000 in EADS stock)....in the same period, BA's stock is up roughly 80%-90%.

Long-term comparisons of EADS (quoted in Euros) and Boeing (quoted in Dollars) share prices should include exchange-rate variations. Do they?

....I didn't include exchange-rate variations as EADS would basically be invested my Europeans and Boeing would mostly be invested by this side of the Atlantic...thus it mostly negates the effect of exchange rates..now if a person from this side of the Atlantic invested in EADS 7 years ago (which would probably represent an extremely small fraction of the EADS float) and decided to cash out, then on a "dollar-for-dollar" investment, one would be ahead as exchanging Euro for dollar would be a net positive as the Euro has appreciated by 40%-50% against the U.S. dollar....the converse is true also.

However, what is important is inflation..which if added for EADS stock, would make a negative return if one invested in EADS 7 years ago.....

Quoting CygnusChicago (Reply 32):
Quoting Jacobin777 (Reply 30):
......the problem with the A380 was roughly 2 1/2 years ago..not five years ago, so I don't get your point..

EADS was up 275% when the A380 issues hit. Value hasn't eroded since then. The point is, there is no sinister trend in EADS stock. The market revalued it when the A380 issues became apparent. End of story.

...well, I don't know about you, but I've never mentioned anything about a "sinister trend"...and adding for inflation, value actually has eroded...
"Up the Irons!"
 
TKV
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RE: Bottom Falling Out Of Eads Stock?

Wed Aug 22, 2007 2:55 am

Quoting Gbfra (Reply 31):
Long-term comparisons of EADS (quoted in Euros) and Boeing (quoted in Dollars) share prices should include exchange-rate variations. Do they?

Yes, you are right om that.
But referred to my post Reply 9, there was no material exchange valuation between August20 and June 15, the comparisons are valid.

Long term, the exchange rate is a lottery; The Euro was $ 1,20 initially, then dropped strongly under 1,00 and now it is at 1.35. From average 2000 to Euro has gained 35%, but the Boeing stock more than 100%, so the Argument of Jacobin777 is still substantially valid, more so if the stock was bought after 2000.

TKV
 
Rbgso
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RE: Bottom Falling Out Of Eads Stock?

Wed Aug 22, 2007 2:58 am

They're sellling A320s and A330s like mad. Cash flow has stabilized. Sure the A380 may have been a drag earlier, but those problems appear to be behind them. The A350 program is off to a slow start, but only in comparison to the 787's phenominal success. I agree, for someone with a strong stomach, this may be a buying opportunity. I know from my own investments that there are times that stock price does not behave in correlation to news or performance.

EADS is more than just Airbus. All indications are the defense side of the business is doing well, correct? Perhaps somewhere down the road, shareholders would be better served by a spinoff.
 
TKV
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RE: Bottom Falling Out Of Eads Stock?

Wed Aug 22, 2007 3:41 am

[quote=Rbgso,reply=35]Reply 35

I would basically agree with you, with two caveats:

1) The A320, in spite of the large sales, has a razor thin mark up due to the strong competition of the B737 and progressively increasing by Embraer and Canadair, contributing little to the overall balance

2) As the last 6-month report of EADS shows, the military component, and several joint ventures EADS is doing significantly less well

TKV
 
cygnuschicago
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RE: Bottom Falling Out Of Eads Stock?

Wed Aug 22, 2007 3:50 am

Quoting TKV (Reply 36):
The A320, in spite of the large sales, has a razor thin mark up due to the strong competition of the B737 and progressively increasing by Embraer and Canadair, contributing little to the overall balance

Can you provide evidence of this "razor thin mark up"?
If you cannot do the math, your opinion means squat!
 
zvezda
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RE: Bottom Falling Out Of Eads Stock?

Wed Aug 22, 2007 3:53 am

Quoting CygnusChicago (Reply 37):
Can you provide evidence of this "razor thin mark up"?

The enormous order backlogs provide evidence to the contrary. The narrow-body market has been a seller's market for the last few years.
 
gbfra
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RE: Bottom Falling Out Of Eads Stock?

Wed Aug 22, 2007 3:57 am

Quoting Zvezda (Reply 38):
The enormous order backlogs provide evidence to the contrary. The narrow-body market has been a seller's market for the last few years.

Correct.
This is the reason why the operational margin of Airbus for the first half of 2007 was higher than expected by many financial analysts.

[Edited 2007-08-21 20:59:27]
The fundamental things apply as time goes by
 
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glideslope
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RE: Bottom Falling Out Of Eads Stock?

Wed Aug 22, 2007 4:45 am

Quoting Revelation (Reply 1):
Makes me wonder at what price Forgeard et al sold at.

LOL, you've got that right brother. The Cat always sneaks through the fence as the tree comes down.  checkmark 
To know your Enemy, you must become your Enemy.” Sun Tzu
 
astuteman
Posts: 6346
Joined: Mon Jan 24, 2005 7:50 pm

RE: Bottom Falling Out Of Eads Stock?

Wed Aug 22, 2007 5:21 am

Quoting TKV (Reply 36):
The A320, in spite of the large sales, has a razor thin mark up due to the strong competition of the B737 and progressively increasing by Embraer and Canadair, contributing little to the overall balance

Come on - we're always being told the widebodys are being given away - the profits have to come from somewhere.

If you took 2006's exceptional write-downs on the A380 and A350 out of the picture, the A320 and A330 generated about E3Bn of operating profit in 2006 for Airbus. That was at a margin of c. 11% on turnover.
By value, A320's must have been a good 60% of that turnover.
If A320's were sold on "razor thin" margins, then A330's must have been making 25%+ margin  no 

Margins realised on A320's last year must have been at least 8% or more.

(And remember, those "operating margins" are after some 8% of total Airbus turnover spent in R+D (some E2.2Bn) has been extracted).

Quoting Zvezda (Reply 38):
The enormous order backlogs provide evidence to the contrary. The narrow-body market has been a seller's market for the last few years.

 checkmark 

Regards
 
sllevin
Posts: 3312
Joined: Wed Jan 30, 2002 1:57 pm

RE: Bottom Falling Out Of Eads Stock?

Wed Aug 22, 2007 5:39 am

The simple answer for the decline is fear of future credit issues.

Should EADS have to go the conventional credit route for capital (which they have largely avoided to date) they will find it very difficult (as will Boeing, btw). The entire credit market is in upheaval, and it's just not as easy to go borrow a few billion dollars as it was just a few months ago.

Steve
 
ikramerica
Posts: 13772
Joined: Mon May 23, 2005 9:33 am

RE: Bottom Falling Out Of Eads Stock?

Wed Aug 22, 2007 5:47 am

Quoting Astuteman (Reply 29):
I'm sure you would. I would too. Boeing has been trading at c. $100 recently. $20 would definitely ring some alarm bells..........

$20 was the wrong number to choose. $40 was the right number. Boeing would have to be trading at $40 now to be in the same circumstance as EADS, which would still ring major alarm bells. Well, not really, as it wouldn't have dropped from $100 in one day. It never would have reached $100, and would have been slowly declining for a long time...

Quoting Jacobin777 (Reply 33):
now if a person from this side of the Atlantic invested in EADS 7 years ago (which would probably represent an extremely small fraction of the EADS float) and decided to cash out, then on a "dollar-for-dollar" investment, one would be ahead as exchanging Euro for dollar would be a net positive as the Euro has appreciated by 40%-50% against the U.S. dollar....the converse is true also.

But again, if someone from the USA had invested in Euro currency instruments back then, and then held them, and cashed them back into dollars, the same effect would happen as investing in EADS and doing this.

So that argument really doesn't matter, as it's a red herring when talking about EADS as a good investment over time. It hasn't been, as cash in the same currency would have been a better investment.

Quoting Rbgso (Reply 35):
They're sellling A320s and A330s like mad.

But you can sell yourself into bankruptcy. In fact, it's quite common for this to happen, where companies want to sell their way out of trouble, but can't command the right price for the products, and it doesn't help.

Quoting Zvezda (Reply 38):
The enormous order backlogs provide evidence to the contrary. The narrow-body market has been a seller's market for the last few years.

But we have seen unprecedented growth in narrowbody sales, and this can indicate many things. One possibility is that demand always increases when prices are dropped. In this case, it makes startup airlines more desirable businesses because initial costs are lower. And we are seeing lots of these airlines, a great number buying the A320 over the 737NG. This trend does point to a lowering of prices by Airbus to stimulate the market and gain market share.
Of all the things to worry about... the Wookie has no pants.
 
gbfra
Posts: 427
Joined: Tue Sep 05, 2006 5:50 am

RE: Bottom Falling Out Of Eads Stock?

Wed Aug 22, 2007 6:01 am

Quoting Sllevin (Reply 42):
The simple answer for the decline is fear of future credit issues.


I don't think so.

EADS/Airbus have a strong cash position at the moment and the bulk of development costs for the A350 will fall into the 2010-2013 time period. Even if credit markets are in a crisis at the moment it is impossible to state that this crisis will still exist in 2010.
The fundamental things apply as time goes by
 
FAEDC3
Posts: 111
Joined: Thu Jun 21, 2007 10:11 am

RE: Bottom Falling Out Of Eads Stock?

Wed Aug 22, 2007 6:34 am

It really amazes me how people here write with so much assurance as if they had seen the financial statements, which I would recommend doing.

EADS has (as per Financials) a healthy cash position, because of my work I get to hear many conference calls by analysts, independent researchers and investment managers, and if there´s one thing all agree on is the cash position and the good rate of sales. Where does all the revenue come from then?

If EDAS were giving the widebodies away and making no profit on narrowbodies then what´s making up for their profit? Operating Profit that is
 
TKV
Posts: 368
Joined: Wed Aug 01, 2007 10:59 pm

RE: Bottom Falling Out Of Eads Stock?

Wed Aug 22, 2007 10:04 am

Quoting FAEDC3 (Reply 45):
one thing all agree on is the cash position and the good rate of sales. Where does all the revenue come from then?

If EDAS were giving the widebodies away and making no profit on narrowbodies then what�-- making up for their profit? Operating Profit that is

The operating profit has little to do with the cash position, as ithe latter can be improved by bank loans, non-cash payment of supplies, sale of assets etc.

EADS has a dismal small operating profit, practically zero, as the combination of the positive non-civil business (which perspectives are clouded by the A400, problems with certain helicopter lines and joint ventures, as Galileo) and the Airbus losses. And yes, they make little profit with the narrowbodies (the latter they are admitting so), sold many A330 at extremely low prices and last not least, are selling and
are trying to sell to the original A350A buyers, at the same price, the vastly more costly A350XWB, a fact that will hit the books in 6-9 years (unless they book out a reserve earlier, which would be the right thing to do) And these are the which the markets evaluate !

TKV
 
jacobin777
Posts: 12262
Joined: Sat Sep 11, 2004 6:29 pm

RE: Bottom Falling Out Of Eads Stock?

Wed Aug 22, 2007 10:10 am

Quoting Ikramerica (Reply 43):

But again, if someone from the USA had invested in Euro currency instruments back then, and then held them, and cashed them back into dollars, the same effect would happen as investing in EADS and doing this.

So that argument really doesn't matter, as it's a red herring when talking about EADS as a good investment over time. It hasn't been, as cash in the same currency would have been a better investment.

..hence my comments below... Wink

Quoting Jacobin777 (Reply 30):
Since its inception in 2000 (formation of the merger), EADS stocks has basically gone nowhere (in other words, I would have been better off had I hypothetically put $10,000 in European treasuries in 2000 versus putting $10,000 in EADS stock)....

...that being said, my comment was in reference to investing either in Boeing or EADS...

Quoting TKV (Reply 34):
so the Argument of Jacobin777 is still substantially valid, more so if the stock was bought after 2000.

...thanks for the kind words.... Smile
"Up the Irons!"
 
justloveplanes
Posts: 868
Joined: Thu Jul 08, 2004 5:38 am

RE: Bottom Falling Out Of Eads Stock?

Wed Aug 22, 2007 10:26 am

Quoting Zvezda (Reply 17):
The fall in the price of EADS stock is not attributable entirely either to EADS or the general markets. It is clearly a combination of both.

My two cents is that Airbus has had a specific correction attributable not so much to the delay in Power 8, but the reason for the delay. As long as French and German PM's are micromanaging the labor side of this, investors are going to stay clear. Politicians are just that, they are not about maximizing shareholder wealth, they are more interested in greater political gain which in this case is labor peace.

Shareholder's have to take a back seat, and the market reflects this.
 
sllevin
Posts: 3312
Joined: Wed Jan 30, 2002 1:57 pm

RE: Bottom Falling Out Of Eads Stock?

Wed Aug 22, 2007 12:08 pm

Quoting Gbfra (Reply 44):
Even if credit markets are in a crisis at the moment it is impossible to state that this crisis will still exist in 2010.

Not exactly. While there may be a short term crisis, it's clear that the long term will not be as rosy as the past five or six years (where the cost of money hovered near zero) for a very long time. The past few years were actually quite an aberration; where we are going now is the norm.

Steve