Long-established in the Aerospace & Defense industry, Boeing Co (BA, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 0.75%, juxtaposed with a three-month change of -4.42%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Boeing Co.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 4/10
- Profitability rank: 6/10
- Growth rank: 2/10
- GF Value rank: 5/10
- Momentum rank: 10/10
Based on the above method, GuruFocus assigned Boeing Co a GF Score of 69 out of 100, which signals poor future outperformance potential.
Understanding Boeing Co's Business
Boeing Co, with a market cap of $133.1 billion and sales of $75.76 billion, is a major aerospace and defense firm operating in four segments: commercial airplanes; defense, space, and security; Global services; and Boeing capital. Competing with Airbus in commercial airplanes and with Lockheed, Northrop, and several other firms in defense, Boeing's diverse portfolio includes military aircraft and weaponry. The Global services segment provides aftermarket support to airlines, ensuring a comprehensive service offering beyond initial sales. Despite its broad reach, Boeing's operating margin stands at a concerning -1.97%, reflecting current operational challenges.
Financial Strength Breakdown
Boeing Co's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 0 positions it worse than 0% of 198 companies in the Aerospace & Defense industry, signaling potential challenges in managing interest expenses on outstanding debt. The Altman Z-Score of just 1.5 falls below the distress zone threshold of 1.81, indicating a risk of financial distress in the near future. Furthermore, a low cash-to-debt ratio of 0.26 and a high debt-to-Ebitda ratio of 30.6, which is above the warning level of 4, exacerbate the concerns regarding Boeing's ability to manage its debt.
Growth Prospects
Boeing Co's growth trajectory appears to be stunted, as reflected by its low Growth rank. The company's revenue has declined by an average of -6.1% per year over the past three years, underperforming 73.68% of 266 companies in the Aerospace & Defense industry. This decline in revenue is a red flag in a rapidly evolving market. Additionally, Boeing Co's predictability rank is just one star out of five, which adds to investor uncertainty regarding the consistency of revenue and earnings.
Next Steps
Considering Boeing Co's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. Investors should be cautious and consider these factors when evaluating the company's future prospects. For those seeking to identify more robust investment opportunities, GuruFocus Premium members can utilize the GF Score Screen to find companies with strong GF Scores.
Is Boeing Co poised for a turnaround, or will these financial and growth challenges continue to impede its performance? Value investors must weigh these factors carefully in their decision-making process.
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.
