Is Boeing a Buy Sell or Hold for Risk-Aware Investors Considering Economic Moat Rating and Financial Strength

As a risk-aware investor, you're likely considering Boeing's economic moat rating and financial strength before deciding whether to buy, sell, or hold. Boeing has a strong economic moat, which is a significant barrier to entry for competitors.

Boeing's financial strength is evident in its debt-to-equity ratio, which is around 0.8, indicating a manageable level of debt.

The company's revenue has been steadily increasing over the years, with a compound annual growth rate (CAGR) of 5.2% from 2015 to 2020.

Boeing's net income has been volatile due to various factors, including the COVID-19 pandemic, but it has shown resilience in recent years.

Boeing's indispensable role in the aviation industry continues, despite quality control issues. This is a crucial point to consider for investors.

The company has a backlog of 5,625 airplanes, which could lead to significant growth in deliveries and profits. This is a promising sign for Boeing's future.

However, there's uncertainty around labor negotiations with the International Association of Machinists (IAM) that expires in September. This could be costly for the company.

Boeing's management has set a free-cash-flow (FCF) target of $10 billion in 2025 to 2026, which is a relatively cheap valuation for a stock with such a strong market position. This is a key factor to consider for investors.

Wall Street analysts are skeptical about Boeing's ability to meet this target, with a consensus of $8.2 billion in FCF in 2026. This could be a reason to be cautious about investing in Boeing.

The ongoing struggle to ramp up airplane production and return the defense business to consistent profitability also adds to the uncertainty surrounding Boeing's stock. This is a significant concern for investors.

The market momentum for Boeing is currently strong, with a daily balance of power at 9.2 T and a rate of daily change at 1.01.

This indicates a steady increase in the stock's value over the past day. The day median price and day typical price are both at 1058.61, which suggests a stable market price. The price action indicator is at 3.3, suggesting a moderate level of price movement.

The period momentum indicator is at 6.61, which is a relatively high reading and suggests that the stock's price is likely to continue moving in the same direction.

Boeing stock is expected to see a significant upside, with a consensus price target of $198.8 a share, representing a 28.3% increase from its current price.

Investors should consider this initial view as a benchmark to evaluate other potential valuations and outlooks.

Some analysts, like those at Susquehanna, are even more optimistic, valuing Boeing stock as high as $210 a share, which would translate to a 35.5% increase.

Boeing's premium valuation compared to its peers, such as Lockheed Martin and Northrop Grumman, is due to its strong performance and growth prospects.

The company's forward P/E ratio of 45.3x is significantly higher than the industry average of 22.0x.

Market Momentum is a crucial factor to consider when evaluating a company's performance. Boeing's market momentum is currently strong, with a Daily Balance Of Power of 9.2 T in one instance, indicating a significant shift in market sentiment.

The Rate Of Daily Change is consistently high, at 1.01 in both examples, suggesting that the market is moving rapidly. This can be both a blessing and a curse, as it can lead to significant gains but also increased volatility.

Day Median Price is a key indicator of market momentum, and in one example, it's as high as 1058.61. This suggests that the market is experiencing a period of strong growth.

The Price Action Indicator is another important metric, and in one example, it's at 3.3, indicating a strong price movement. This can be a sign of a market in motion, with buyers and sellers actively engaged.

Here are some key metrics to consider when evaluating Boeing's market momentum:

Overall, Boeing's market momentum is a complex and multifaceted factor that requires careful consideration. By examining these key metrics, investors can gain a better understanding of the market's dynamics and make more informed decisions.

Boeing's financial performance has been a major concern in recent years. The company borrowed nearly $50 billion in 2019-20 and has struggled to recover.

Boeing's debt has increased significantly, reaching $57.5 billion at the end of the third quarter of 2024. This is a substantial increase from the $52 billion in debt the company had at the end of 2023.

The company's cash flow has also been impacted, with a free cash flow of ($12.1 billion) in 2024. This is a decrease from the $4.4 billion in free cash flow in 2022.

Here is a summary of Boeing's cash flow accounts from 2020 to 2025 (projected):

Boeing's financial performance has been a major concern, but some analysts believe the company can recover by late 2026.

Boeing's stock performance is driven by a number of key factors, including its rising backlog of orders. This backlog has increased to a current valuation of $518 billion, which will eventually be turned into revenues and earnings.

Boeing's backlog increase is partly due to China's economy coming back online, with air traffic expected to rise by 5.2% a year until 2030. This trend is expected to benefit Boeing significantly.

The company's ability to deliver on these orders is crucial, but it's facing a strike situation that's not helping. Boeing has offered a 35% wage hike to its machinist workers in an attempt to resolve the issue and resume production.

Despite these challenges, Boeing's potential for growth remains strong. The company has a backlog of 5,625 airplanes and is expected to hit delivery targets, which can significantly increase its margins and profits.

Here are some key statistics to consider:

Boeing's management has also set a target of achieving $10 billion in free-cash-flow (FCF) by 2025-2026. This would put the stock's valuation at just 11.1 times FCF in 2026, which is considered a relatively cheap valuation for a company with such a strong market position.

Boeing's fundamentals are a mixed bag compared to its peers. The company's return on asset is -0.0438, which is worse than the average of its peers.

Boeing's profit margin is (0.18)%, which is also worse than the average of its peers at (1.27)%. On the other hand, the company's market capitalization is a significant 167.54 billion dollars, which is better than the average of its peers at 16.62 billion dollars.

Here are some key statistics that highlight the differences between Boeing and its peers:

Boeing's revenue is 66.52 billion dollars, which is better than the average of its peers at 9.43 billion dollars. However, the company's net income is -11.83 billion dollars, which is worse than the average of its peers at 570.98 million dollars.

The company's total debt is 54.19 billion dollars, which is a significant burden. However, the current ratio is 1.22, which indicates that the company has sufficient liquidity to meet its short-term obligations.

Boeing's beta is 1.52, which indicates that the company's stock is more volatile than the average stock. The market capitalization is 135.67 billion dollars, which is a significant amount of capital.

Boeing's financial strength has been significantly impacted by the turmoil in the last three years. The company borrowed nearly $50 billion in 2019-20 to keep the lights on.

To understand the extent of the financial strain, let's take a look at Boeing's capitalization. As of 2023, the company had about $52 billion in debt and $16 billion in cash, with a net debt of $4 billion less than at the end of 2022.

Boeing's financial situation has not improved since then. At the end of the third quarter of 2024, the company had $10.5 billion in cash and $57.5 billion in debt.

Here's a breakdown of Boeing's cash flow accounts from 2020 to 2025 (projected):

The company's financial situation has been further complicated by a prolonged machinists' strike and the need to cut costs. As a result, Boeing announced layoffs and issued $20 billion of combined equity and convertible preferred stock due 2027.

Boeing's economic moat is a key factor in its financial performance, and it's worth understanding what that means. A wide moat in the context of economics refers to a company's ability to maintain its competitive advantage over time.

Boeing benefits from durable intangible assets, which are essentially the company's unique skills, knowledge, and expertise that are difficult to replicate. This includes the technical complexity of its products, such as aircraft manufacturing, and the extensive regulatory barriers to entering the market. These barriers to entry create a duopoly in the global large-frame jet aircraft market, with Boeing and Airbus being the only two major players.

The global services segment of Boeing's business also has a wide moat due to proprietary access to aftermarket part designs and switching costs stemming from a lack of alternative suppliers for such parts. This means that airlines have no choice but to continue buying Boeing's products, which is a significant advantage for the company.

Here's a breakdown of Boeing's wide moat across different segments of its business:

This wide moat is expected to generate economic profits for Boeing for decades to come, as demand from airlines for its products is expected to remain high.

Boeing's biggest risks are operational risks, which constrain supply, and macroeconomic risks, which limit demand, both of which the company has suffered over the last several years.

The pandemic dramatically reduced air travel and aircraft deliveries, with passenger demand declining by nearly two-thirds in 2020, according to Trade group IATA.

Travel has returned to pre-pandemic levels in most markets, but its recovery was patchy and may face renewed disruption at any time.

China is a major aviation market, and while the recertification of the 737 MAX in China has resumed deliveries of new planes, local airlines may substitute future orders of 737s for Comac C919s to maintain or grow their share of orders for Airbus narrow-bodies.

Boeing faces significant operational risks, which have constrained its supply chain and limited its ability to meet demand.

The pandemic had a devastating impact on air travel, with passenger demand declining by nearly two-thirds in 2020.

Trade group IATA reported that this decline was a major blow to the industry, and it's still recovering from the effects.

Boeing's services business is more vulnerable to temporary disruptions in air travel, which can happen at any time.

The company's commercial jet business has a backlog of orders, which will help it weather any future disruptions.

However, China's aviation market is a major concern, as some local airlines may choose to substitute Boeing's 737s for Comac C919s.

Boeing's reputation for engineering prowess may have taken a permanent hit since repeated manufacturing flaws in 737 MAX jets have hampered Boeing's assembly pace and disrupted airlines' and passengers' schedules.

Manufacturing flaws in the 737 MAX jets have significant consequences, including delays and disruptions to airlines' and passengers' schedules. This is a stark reminder of the risks involved in complex manufacturing processes.

Aircraft development is notoriously susceptible to development delays, hiccups, and cost overruns. This is not just a Boeing issue, but a common problem in the aviation industry.

Repeating manufacturing flaws in a critical product like the 737 MAX can lead to long-term consequences, including changed consumer behavior, especially among business travelers.

Boeing's strong market position in a growing industry makes it a potentially attractive investment. Despite quality control issues, the company's indispensable role in aviation means it can still grow deliveries.

Delivery delays are expected in 2024 due to production quality improvements, but hitting delivery targets can significantly increase Boeing commercial airplanes margins and profits. This is because volume growth on margin expansion is crucial to Boeing's success.

Boeing's management aims to achieve $10 billion in free-cash-flow from 2025 to 2026, which would make the stock trade on a relatively cheap valuation of 11.1 times FCF in 2026. This is a stark contrast to other companies in the industry.

Uncertainty surrounds labor negotiations with the International Association of Machinists, which could impact the company's costs. As seen with UPS and the Teamsters Union, new contracts can be costly in the current environment.

Boeing's returns have been somewhat inconsistent, with a mean return of 0.35, indicating a relatively stable performance. However, the company has faced significant challenges, including a Value At Risk of -2.13, suggesting potential losses.

The Potential Upside of 2.86 shows that Boeing has the potential for significant gains. Meanwhile, the Standard Deviation of 1.70 indicates a relatively high level of volatility.

Here's a summary of Boeing's returns and valuation metrics:

Boeing's fair value estimate suggests that the company's stock is undervalued, with a long-term fair value estimate of $195 per share. This represents an enterprise value 54 times the company's 2025 adjusted EBITDA estimate and 21.6 times its 2026 estimate.

Returns Distribution Density is a crucial aspect of understanding how investments perform. The mean return of 0.35 indicates that, on average, Boeing's distribution density has a positive return.

The value at risk of -2.13 shows that there's a possibility of a negative return, but it's relatively low. This means that while there's some risk involved, it's not extremely high.

Boeing's potential upside is quite significant, with a value of 2.86. This suggests that the company has a good chance of exceeding its average return.

The standard deviation of 1.70 indicates that Boeing's returns can be quite volatile. This means that the actual return may be significantly different from the mean return.

Here's a quick summary of the key statistics:

Boeing's stock has a 4-star rating, suggesting it's undervalued according to our fair value estimate of $195 per share.

This estimate represents an enterprise value of 54 times the company's 2025 adjusted EBITDA estimate.

We forecast one or two more years of hard slogging for Boeing as it clears up labor, manufacturing, and supply chain issues that hamper its production pacing.

The COVID-19 crisis shocked the aviation industry, halving global revenue passenger kilometers in 2020.

A replacement cycle among airlines is expected to take place, with most fleet growth coming from narrow-body aircraft as emerging-market middle-class demand for short-haul and point-to-point medium-haul travel increases.

Boeing's long-term global demand for its products is healthy, and successful scaling up of deliveries is forecasted, with improved margins on its 737 and 787 models in 2026-27.

Boeing's role in the aviation industry is indispensable, and its potential for growth remains strong despite quality control issues.

The company has a backlog of 5,625 airplanes, and hitting delivery targets can significantly increase Boeing commercial airplanes (BCA) margins and profits.

Boeing's management aims to achieve free-cash-flow (FCF) of $10 billion in 2025 to 2026, which would put the stock at a valuation of just 11.1 times FCF in 2026.

Labor negotiations with the International Association of Machinists (IAM) are uncertain, and new contracts can be costly in the current environment.