It’s time to visit an iconic aerospace name. Here is the break down of $BA, otherwise known as Boeing.
Current price: $252.76
52/Wk High: $278.57
52/Wk Low: $141.58
Market Cap: $147.8 Billion
Read below for the break down!
Boeing ($BA) is a leading aerospace, aviation, and defense company that works not only with the US and major global airlines but 150 countries around the world.
Unfortunately, Boeing has suffered major financial pain in recent years, due to both the 737 Max 8 crash crisis and the COVID-19 pandemic.
While the company has taken a beating in recent years, the company is quickly rebounding as the global pandemic dies down. In fact, throughout the past few months increasing travel population and consistent aircraft orders have served as catalysts to Boeing’s stock.
Throughout the past few months, Boeing has received orders from the likes of Southwest Airlines, Dubai Aerospace Enterprises, SMBC Aviation Capital, United Airlines, and more.
In recent news, for example, Southwest Airlines increased their original 737 Max order, ordering 34 more planes on top of the 100 the airline ordered in March.
Boeing’s order book continues to see signs of recovery as well, with the company booking its fourth straight month of sales outpacing cancelations. In May alone, Boeing logged 73 more orders with over 60 of the orders being for the infamous Max aircraft.
Major firms also see increasing air travel as a major catalyst.
“Now that the U.S has hit a 50% vaccination rate, air traffic/indicators are accelerating. … Strong Set Up For Replacement Demand Beyond traffic, aircraft demand is bolstered by (1) better economics of new planes, (2) low interest rates, and (3) lower carbon emissions,” Cowen said in a note.
Digging into the numbers, Boeing missed Q1 2021 expectations with an EPS of $-1.53, significantly lower than the analyst’s consensus EPS estimate of $-1.16. On a year-over-year basis, EPS improved by 10%.
Shifting into revenues, Boeing reported $15.217 billion in total revenue for Q1 2021, representing a decline from the first quarter of 2020, where total revenue was $16.908 billion. On a year-over-year basis, revenues declined by 10%.
Sifting through Boeing segment by segment, the commercial airplanes segment impressed with the segment making a total of 77 deliveries throughout the quarter, representing a 54% year-over-year deliveries jump.
Furthermore, the segment turned out $4.269 billion in revenues, representing an unfortunate 31% decline. On the flip side, loss from operations improved, with total loss from operations landing at $856 million compared to the $2.068 billion in Q1 2020.
Rounding out the commercial airplanes segment, margins significantly improved with operating margin landing at -20.1%, better than the -33.3% in Q1 2020.
Shifting into the defense, space, and security segment, revenues totaled $7.185 billion in Q1, representing a solid 19% increase on a year-over-year basis.
The segment's earnings also jumped, with earnings from operations improving to $405 million from the Q1 2020 level of $-191 million. Rounding out the defense, space, and security segment, operating margin jumped from -3.2% to 5.6% in Q1.
Finally, the global services segment turned out revenues of $3.749 billion, representing a decline of 19% on a year-over-year basis.
On an overall basis, Boeing reported a loss from operations of $83 million in Q1. While the loss is disappointing, it is a big improvement over the Q1 2020 loss from operations of $1.353 billion.
Operating margin also improved significantly, with overall operating margin landing at -0.5%, a big improvement over the Q1 2020 level of -8%.
Rounding out the quarter, Boeing reported a net loss of $561 million. While the net loss is a negative, it represents a strong improvement over the Q1 2020 net loss of $641 million.
Finishing out earnings, operating cash flow improved, totaling $-3.387 billion in 2021 versus the Q1 2020 level of $-4.302 billion.
It is important to note that at the end of Q1 that Boeing’s backlog was strong, totaling $364 billion. At quarter-end, Boeing's backlog included over 4,000 airplanes.
Shifting into the balance sheet the numbers need work.
Total Debt: $63.575 Billion
Total Liabilities: $168.093 Billion
Total Assets: $150.035 Billion
Cash & Short Term Inv: $21.920 Billion
On a valuation basis, Boeing does trade at a premium.
Forward Price to Earnings: 47.10x
Price to Sales: 2.60x
Management has work to do.
Return on Assets: -8.09%
Return on Invested Capital: -21.93%
Given the numbers the analysts are bullish with a mean price target of $273.93/share, representing an 8.38% upside.
The high price target is $310.00/share, representing a 22.65% gain, while the low price target is $229.00/share, representing a -9.40% downside.
The big money is quite involved with 52.79% of Boeing being owned by institutions. Top holders include Newport Trust Company, The Vanguard Group, and BlackRock Institutional Trust.
On a technical basis, Boeing seems to be in a strong stair-step pattern. According to the six-month charts the MACD is moving with upside momentum within a range of 4.68 down to 2.71.
The six-month charts are also indicating an RSI of 62.05 and CCI of 88.93, both of which are on the high end.
While the company is improving, risks include a delay in the travel recovery, tough competition with Airbus, China trade tensions, and likely short-term shortages.
On the flip side, potential positive catalysts include the re-approval of the 737 Max in China, Russia, and India as well as improved financials and a lack of debt increases.
In short, Boeing ($BA) is an underdog with a long road ahead, but with a new management team, a recovering economy, increasing orders, and recent FAA approvals, the future is potentially bright.
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Disclaimer: This is not direct financial advice, simply an opinion based on independent research.