Is Boeing (BA) Offering Value After A 33% One Year Share Price Gain

• If you are wondering whether Boeing's current share price offers value or just reflects renewed optimism, it helps to start by grounding expectations in the recent numbers and the key valuation checks.
• Boeing shares last closed at US$228.12, with returns of 5.1% over the past week, 10.6% over the last month, 0.2% year to date and 32.8% over the past year, while the 3 year and 5 year returns sit at 9.7% and 10.1% respectively.
• Recent headlines around Boeing have continued to focus on its role as a major aircraft manufacturer and its efforts to address past safety and operational challenges, which remain an important part of how investors think about risk. These developments provide important context when looking at how the stock has traded over different time frames.
• Right now, Boeing scores 3 out of 6 on Simply Wall St's valuation checks. This indicates it screens as undervalued on half of those measures, and you can see that breakdown in more detail via this valuation score of 3. This sets up a comparison of traditional valuation methods before looking at a potentially more complete way to think about value later in the article.

Find out why Boeing's 32.8% return over the last year is lagging behind its peers.

Approach 1: Boeing Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a business might be worth by projecting its future cash flows and then discounting them back to today’s dollars.

For Boeing, the model used here is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is a loss of about US$5.9b, so the starting point is still negative. Analysts and internal estimates then project Boeing’s free cash flow turning positive over time, reaching about US$14.3b in 2030, with further estimates extending out to 2035. Simply Wall St uses analyst forecasts where available and extrapolates beyond that using its own assumptions.

When all those projected cash flows are discounted back to today, the DCF model arrives at an estimated intrinsic value of about US$354.61 per share. Compared with the recent share price of US$228.12, this implies the stock screens as 35.7% undervalued on this model.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Boeing is undervalued by 35.7%. Track this in your watchlist or portfolio, or discover 884 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Boeing.

Approach 2: Boeing Price vs Sales

For companies where earnings are limited or volatile, the P/S ratio is often a more useful yardstick because it compares the share price to revenue rather than to profits that can swing around.

What counts as a “normal” or “fair” P/S ratio often reflects how quickly investors expect revenue to grow and how much risk they see in those future sales. Higher expected growth and lower perceived risk can support a higher multiple, while slower growth or higher risk usually point to a lower one.

Boeing currently trades on a P/S ratio of 2.15x. That sits close to the peer average of 2.07x and below the Aerospace & Defense industry average of 3.71x. Simply Wall St’s Fair Ratio for Boeing is 2.13x. This is its proprietary view of what the P/S should be after weighing factors like growth outlook, profit margins, industry, market cap and key risks.

This Fair Ratio can be more useful than a simple comparison with peers or the industry because it adjusts for Boeing’s specific profile rather than assuming all companies should trade on the same benchmark multiple.

The current P/S of 2.15x is very close to the Fair Ratio of 2.13x, so Boeing screens as ABOUT RIGHT on this metric.

Result: ABOUT RIGHT

P/S ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1443 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Boeing Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, where you set a clear story for Boeing, link that story to your own forecast for revenue, earnings and margins, and arrive at a Fair Value you can compare with the current share price. You can do this using an easy tool on Simply Wall St’s Community page that updates automatically when fresh news or earnings arrive. One investor might plug in the higher analyst assumptions and a Fair Value around US$287, while another leans on the more cautious US$150 view, and each can quickly see whether their Boeing Narrative suggests the stock looks expensive or offers value right now.

Do you think there's more to the story for Boeing? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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