Long-established in the Aerospace & Defense industry, Boeing Co (BA, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a decline of 3.19%, juxtaposed with a three-month change of 11.51%. Fresh insights from the GuruFocus Score Rating 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.
Decoding 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.
- 1. Financial strength rank: 3/10
- 2. Profitability rank: 6/10
- 3. Growth rank: 2/10
- 4. GF Value rank: 5/10
- 5. Momentum rank: 10/10
Based on the above method, GuruFocus assigned Boeing Co the GF Score of 68 out of 100, which signals poor future outperformance potential.
Understanding Boeing Co's Business
Boeing Co, with a market cap of $133.48 billion, is a major player in the aerospace and defense industry. It operates in four segments: commercial airplanes; defense, space, and security; global services; and Boeing capital. Competing with Airbus in the production of aircraft and with Lockheed, Northrop, and several other firms in creating military aircraft and weaponry, Boeing Co has a significant presence in the industry. However, its operating margin stands at -4.63, indicating potential profitability issues. The company's sales amount to $73.61 billion.
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 means that the stock is operating at a loss, highlighting potential challenges the company might face when handling its interest expenses on outstanding debt. The company's Altman Z-Score is just 1.48, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.26 indicates a struggle in handling existing debt levels.
Growth Prospects
A lack of significant growth is another area where Boeing Co seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by -6.1 per year over the past three years, which underperforms worse than 72.8% of 261 companies in the Aerospace & Defense industry. Stagnating revenues may pose concerns in a fast-evolving market. Lastly, Boeing Co predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Given Boeing Co's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While the company has a strong presence in the Aerospace & Defense industry, its financial health and growth prospects raise concerns about its ability to outperform in the future. Therefore, investors should exercise caution when considering this stock.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
