Boeing Co (BA, Financial) has experienced a notable day's gain of 4.01%, yet the past three months have seen a decline of 13.16% in its stock value. With a reported Loss Per Share of 4.7, investors are left pondering whether Boeing Co (BA) is modestly undervalued. This valuation analysis aims to uncover the true worth of Boeing Co (BA) and guide investors on whether the current market price reflects the company's intrinsic value.
Company Introduction
Boeing Co is a leading entity in the aerospace and defense industry, operating across commercial airplanes, defense, space, security, global services, and capital segments. Competing against giants like Airbus and Lockheed, Boeing Co has a significant presence in both commercial aircraft production and military equipment. Despite a challenging market, the company's current stock price of $204.54 is juxtaposed against a GF Value of $231.66, suggesting a potential undervaluation. This financial juxtaposition sets the stage for a deeper investigation into Boeing Co's intrinsic value.
Summarizing the GF Value
The GF Value is a unique measure of intrinsic stock value, incorporating historical trading multiples, an adjustment factor based on past performance, and future business projections. The GF Value Line suggests an ideal trading range for the stock. Currently, Boeing Co's stock price is below the GF Value Line, indicating it may be modestly undervalued. This positioning implies that Boeing Co could offer higher future returns than its business growth alone might suggest.
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Financial Strength and Stability
Investing in companies with robust financial strength is crucial to mitigate the risk of capital loss. Boeing Co's financial strength, with a cash-to-debt ratio of 0.26, ranks lower than many of its industry peers. This metric, along with other financial data, leads to a financial strength rank of 4 out of 10, highlighting potential concerns about the company's financial stability.
Profitability and Growth Prospects
Boeing Co has shown profitability in 6 out of the last 10 years, though recent performance indicates a Loss Per Share and an operating margin that lags behind industry standards. The company's profitability rank is deemed fair, but its growth trajectory is less promising, with revenue and EBITDA growth rates falling behind a majority of competitors in the aerospace and defense sector.
ROIC vs WACC: A Profitability Indicator
An important profitability indicator is the comparison between Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC). Boeing Co's ROIC of -1.76 is below its WACC of 11.13, suggesting the company is not currently generating sufficient returns on its investments to cover its financing costs.
Conclusion
In summary, Boeing Co (BA, Financial) appears modestly undervalued based on the GF Value, yet its financial condition is concerning, and its profitability and growth prospects are only fair. The company's current market position and financial outlook suggest that while there may be potential for higher future returns, investors should proceed with caution and consider the broader financial context.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
