ValuEngine BUY Boeing Projects Increased Sales for 2019

For today’s bulletin, we take a look at Boeing $BA.

VALUATION WATCH: Overvalued stocks now make up 31.9% of our stocks assigned a valuation and 11.39% of those equities are calculated to be overvalued by 20% or more. There are three sectors calculated to be overvalued.

The Boeing Company (BA) is the world’s largest aerospace company and leading manufacturer of commercial jetliners and defense, space and security systems. A top U.S. exporter, the company supports airlines and U.S. and allied government customers. Boeing products and tailored services include commercial and military aircraft, satellites, weapons, electronic and defense systems, launch systems, advanced information and communication systems, and performance-based logistics and training. Boeing has a long tradition of aerospace leadership and innovation. The company continues to expand its product line and services to meet emerging customer needs. Its broad range of capabilities includes creating new, more efficient members of its commercial airplane family; designing, building and integrating military platforms and defense systems; creating advanced technology solutions; and arranging innovative financing and service options for customers.

Earnings continue to come out and we have another company reporting today whose business is heavily dependent on world trade and the strength of the global economy, Boeing. Boeing reported Q4 2018 results this morning and the the numbers were impressive.

Boeing reported fourth-quarter revenue of $28.3 billion, GAAP earnings per share of $5.93 and core earnings per share (non-GAAP)* of $5.48, all company records. Revenue was a record $101.1 billion for the full year reflecting higher commercial deliveries and increased volume across the company.

During the quarter, Boeing delivered 238 airplanes, including the delivery of the 787th 787 Dreamliner and the first 737 MAX Boeing Business Jet. The 737 program delivered 111 MAX airplanes in the fourth quarter, including the first MAX delivery from the China Completion Center, and delivered 256 MAX airplanes in 2018. The first 777X flight test airplane completed final body join and power-on, and the program remains on track for flight testing this year and first delivery in 2020. Boeing booked 262 net orders during the quarter, valued at $16 billion. Backlog remains robust with nearly 5,900 airplanes valued at $412 billion.

Boeing Chairman, President and Chief Executive Officer Dennis Muilenburg noted that across the enterprise our team delivered strong core operating performance and customer focus, driving record revenues, earnings and cash flow and further extending our global aerospace industry leadership in 2018, Our financial performance provided a firm platform to further invest in new growth businesses, innovation and future franchise programs, as well as in our people and enabling technologies. In the last 5 years, we have invested nearly $35 billion in key strategic areas of our business, all while increasing cash returns to shareholders.

Notable here is that Boeing reported strong demand from China, so that is a positive sign for those worried about tariffs and trade wars. Boeing is particularly sensitive to global trade due to its status as the biggest manufacturer of aircraft in the world.

VALUENGINE RECOMMENDATION: ValuEngine continues its BUY recommendation on Boeing for 2019-01-29. Based on the information we have gathered and our resulting research, we feel that Boeing has the probability to OUTPERFORM average market performance for the next year. The company exhibits ATTRACTIVE Company Size and Sharpe Ratio.

ValuEngine Forecast
Target
Price*
Expected
Return
1-Month 367.67 0.76%
3-Month 370.41 1.51%
6-Month 380.33 4.23%
1-Year 398.02 9.07%
2-Year 405.43 11.10%
3-Year 427.50 17.15%
Valuation & Rankings
Valuation 13.49% overvalued Valuation Rank(?) 16
1-M Forecast Return 0.76% 1-M Forecast Return Rank 93
12-M Return 7.07% Momentum Rank(?) 83
Sharpe Ratio 0.75 Sharpe Ratio Rank(?) 96
5-Y Avg Annual Return 17.20% 5-Y Avg Annual Rtn Rank 93
Volatility 23.04% Volatility Rank(?) 63
Expected EPS Growth 20.17% EPS Growth Rank(?) 59
Market Cap (billions) 260.15 Size Rank 100
Trailing P/E Ratio 24.21 Trailing P/E Rank(?) 47
Forward P/E Ratio 20.15 Forward P/E Ratio Rank 26
PEG Ratio 1.20 PEG Ratio Rank 36
Price/Sales 2.65 Price/Sales Rank(?) 36
Market/Book n/a Market/Book Rank(?) n/a
Beta 1.22 Beta Rank 28
Alpha 0.17 Alpha Rank 87