Today, Boeing Co (BA, Financial) experienced a daily gain of 3.15%, although it has seen a 3-month loss of 10.83%. With a Loss Per Share of 3.55, investors are keen to understand whether the stock is modestly undervalued. This article aims to explore Boeing Co's intrinsic value, providing a detailed analysis to guide potential investment decisions.
Company Overview
Boeing Co, a major player in the aerospace and defense industry, operates through three primary segments: commercial airplanes; defense, space, and security; and Global Services. Competing with giants like Airbus and Lockheed, Boeing not only manufactures aircraft for more than 130 passengers but also provides military equipment and aftermarket support to airlines. With a current stock price of $182.57 and a market cap of $112.10 billion, understanding its valuation against the GF Value of $227.01 is crucial for investors.
Understanding GF Value
The GF Value is a proprietary measure used to determine the fair market value of a stock. It incorporates historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. For Boeing Co, the GF Value suggests that the stock is modestly undervalued, indicating potential for higher future returns relative to its current market price.
Financial Strength and Stability
Before investing, assessing a company's financial strength is essential to avoid potential capital loss. Boeing Co's cash-to-debt ratio of 0.16 ranks lower than many of its peers, reflecting a weaker financial position. This is further evidenced by its poor balance sheet, receiving a GuruFocus financial strength rating of 3 out of 10.
Profitability and Growth Prospects
Boeing Co has shown profitability in 5 out of the last 10 years, with recent revenues amounting to $76.40 billion. However, its operating margin of -1.12% is concerning, ranking lower than 73.44% of its industry counterparts. This indicates only fair profitability, which could impact long-term investment returns.
Moreover, Boeing's growth metrics are not promising, with a 3-year average revenue growth rate better than only 52.67% of industry competitors. Its EBITDA growth rate stands at 0%, significantly lower than industry standards.
ROIC vs. WACC Analysis
Evaluating Boeing Co's profitability involves comparing its Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC). Currently, Boeing's ROIC of -1.06 falls short of its WACC of 9.79, indicating that the company is not generating adequate returns on its investments.
Conclusion
While Boeing Co (BA, Financial) appears modestly undervalued according to the GF Value, its financial health and profitability metrics suggest caution. Potential investors should consider both the opportunities and risks associated with Boeing's current market position. For a deeper insight into Boeing's financials and to explore other high-quality investment opportunities, visit Boeing Co's 30-Year Financials and the GuruFocus High Quality Low Capex Screener.
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.
