Long-established in the Aerospace & Defense industry, Boeing Co (BA, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 2.61%, juxtaposed with a three-month change of 2.52%. 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.
Understanding 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: 3/10
- Profitability rank: 4/10
- Growth rank: 5/10
- GF Value rank: 9/10
- Momentum rank: 4/10
Based on the above method, GuruFocus assigned Boeing Co the GF Score of 68 out of 100, which signals poor future outperformance potential.
Company Overview
Boeing Co is a major aerospace and defense firm with a market capitalization of $125.985 billion and sales amounting to $73.293 billion. The company operates in three segments: commercial airplanes; defense, space, and security; and global services. Boeing's commercial airplanes segment competes with Airbus in the production of aircraft that can carry more than 130 passengers. Its defense, space, and security segment competes with Lockheed, Northrop, and several other firms to create military aircraft, satellites, and weaponry. The global services segment provides aftermarket support to airlines. Despite its vast operations, Boeing Co faces challenges, as indicated by its operating margin of -9.17%.
Financial Strength Breakdown
Boeing Co's financial strength indicators present some concerning insights about the company's balance sheet health. Boeing Co has an interest coverage ratio of 0, which positions it worse than 0% of 218 companies in the Aerospace & Defense industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. It's worth noting that the esteemed investor Benjamin Graham typically favored companies with an interest coverage ratio of at least five.
The company's Altman Z-Score is just 1.16, 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 0.18 indicates a struggle in handling existing debt levels.
Profitability Concerns
Boeing Co's low Profitability rank can also raise warning signals. With a Piotroski F-Score of 1, Boeing Co's financial health appears concerning. This score, rooted in Joseph Piotroski's nine-point scale, evaluates a firm's profitability, liquidity, and operating efficiency. Given its rating, Boeing Co might be facing challenges in these areas.
Conclusion
In light of 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 Boeing Co's future prospects. For those seeking companies with stronger GF Scores, GuruFocus Premium members can explore more options using the following screener link: GF Score Screen.
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.
