It's time to breakdown one of the most controversial stocks in the market. Here is the breakdown on $BA, otherwise known as Boeing.
Current Price: $199.33
52/Wk High: $374.77
52/Wk Low: $89.00
Read below for the breakdown!
Boeing is one of the most well-known aerospace firms in the world with a history of producing some of the best passenger aircraft in the industry.
Unfortunately, Boeing has suffered major financial pain in recent years, due to both the 737 Max 8 crash crisis and the COVID-19 pandemic.
Although the road has been tough, the company is starting to see hints of positivity with the most recent lifting by the FAA of the flight ban on the 737 Max 8 just days ago.
Shifting into Boeings stock price, it is important to note what the stock price itself is based on. According to TREFIS (@trefis) 43.26% of the stock price is based on Boeings Commercial Airplanes segment.
Furthermore, 28.2% of the stock price is based on the Defence, Space & Security Systems segment, 27.0% based on the Global Services segment, and 1.5% is based on Boeings Capital Corporation segment.
Digging into the financials and the most recent quarter Boeing beat Q3 2020 expectations with an EPS of $-1.39 versus the EPS consensus estimate of $-2.52.
Given both the pandemic and grounding revenues took a hit in Q3, coming in at $14.139 billion, representing a -29% decline year over year. Operating margin also declined from the 2019 level of 6.3% down to -2.8% in 2020.
Moving into operating cash flow the numbers were disappointing with operating cash flow coming in at $-4.819 billion in Q3.
On the otherhand, management did highlight the current backlog of $393 billion and 4,300 commercial airplanes.
Taking a look at the balance sheet the damage is clear to see.
Total Debt: $60.959 billion
Total Liabilities: $173.082 billion
Total Assets: $161.261 billion
Cash & Short Term Inv: $27.116 billion
While the earnings numbers and balance sheet are quite weak, the valuation is somewhat attractive.
Price to Sales: 1.80x
Price to Cash Flow: 287.75x
Absorbing the numbers, the analysts are mixed but growing bullish with the mean price target sitting at $200.72/share, representing a 0.55% gain.
On the bright side Boeing’s high price target is $306.00/share, representing a 53.29% gain, while the low price target is $137.00/share, representing a -31.37% loss.
The big money is also mixed on Boeing, with 50.09% being owned by institutions. Top holders include The Vanguard Group, Newport Trust Company, and BlackRock Institutional Trust.
When it comes to the technicals, Boeing is in short neither great nor bad. According to the six-month charts, the MACD is trending up with strong momentum within a range of 7.1 to 11.18.
The six-month charts are also indicating an RSI of 63.39 and CCI of 93.39 both edging higher but not terribly high. It is also important to note that Boeing trades roughly 175 points off its highs.
Overall, I believe throughout the next few years and more specifically 2021 that Boeing will see a strong comeback due to the lifting of the Max 8 restrictions and ending of the COVID-19 pandemic.
In short, I like Boeing long term but do not see this as a short to mid-term play and I urge caution with a hint of optimism.
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Disclaimer: This is not direct financial advice, simply an opinion based on independent research. Luke Donay does own Boeing stock long.