Boeing Co (BA, Financial) has experienced a daily gain of 3.13% and an impressive 3-month gain of 26.84%. Despite these gains, the company reports a Loss Per Share of $4.7. Investors are now faced with an important question: Is Boeing Co (BA) modestly overvalued? To provide an answer, we must delve into a valuation analysis of the company. Read on to explore our findings and gain a deeper understanding of Boeing Co's intrinsic value.
Company Introduction
Boeing Co, a leading aerospace and defense firm, operates across four segments: commercial airplanes; defense, space, and security; Global services; and Boeing capital. Competing with giants like Airbus and Lockheed, Boeing Co not only manufactures aircraft but also provides military equipment and aftermarket support. With a current stock price of $264.27 and a Fair Value (GF Value) of $231.88, we are prompted to compare these figures to determine the company's true market value.
Summarize GF Value
The GF Value is a measure of a stock's intrinsic value, based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. If a stock is trading significantly above this line, it's considered overvalued, which could lead to poor future returns. Conversely, stocks trading below the GF Value Line are seen as potentially yielding higher returns. At its current market cap of $159.90 billion, Boeing Co appears to be modestly overvalued. This suggests that the long-term return on Boeing Co's stock might be lower than its business growth.
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Financial Strength
Assessing the financial strength of a company is crucial before investing. Companies with weak financials pose a higher risk of loss. Boeing Co's cash-to-debt ratio of 0.26 places it lower than 65.22% of its peers in the Aerospace & Defense industry, signaling poor financial strength with a score of 4 out of 10.
Profitability and Growth
Profitability is a key indicator of a company's investment potential, with higher profit margins often predicting better investment outcomes. Boeing Co has been profitable in 6 of the last 10 years but currently faces challenges with a -1.97% operating margin and a Loss Per Share of $4.7. Its profitability rank is 6 out of 10, which is considered fair.
Growth is another vital factor in valuation. Boeing Co's average annual revenue growth rate of -6.1% is lower than 73.96% of its industry counterparts, indicating a need for improvement in this area.
ROIC vs. WACC
An analysis of a company's Return on Invested Capital (ROIC) in comparison to its Weighted Average Cost of Capital (WACC) can provide insight into its profitability. Ideally, ROIC should exceed WACC. However, Boeing Co's ROIC is at -1.76, while its WACC stands at 10.12, suggesting inefficiency in generating cash flow relative to the capital invested.
Conclusion
In conclusion, Boeing Co (BA, Financial) is currently estimated to be modestly overvalued. The company's financial condition is poor, and its profitability is fair, while its growth ranks poorly compared to industry peers. For a detailed look at Boeing Co's financials, consider examining its 30-Year Financials here.
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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.
