Boeing shares have slipped this year, and investors now face a different type of question about the stock. The issue is whether the current price fairly reflects the cash the business can generate over time.
- The stock is down 13.6% year to date, which puts the focus squarely on whether that reset lines up with the value implied by its cash flows.
- A fresh order from Turkish Airlines for up to 150 737 MAX jets and progress on the O3b mPOWER satellite program may support expectations for future cash generation, even as the Spirit AeroSystems integration and new liabilities could influence cash timing and required investment.
- What if you looked at Boeing through its earnings instead? See why Boeing's 74.5x P/E tells a different valuation story.
The stock's next move may depend on whether the Discounted Cash Flow (DCF) view of Boeing's cash flows supports where the market is currently pricing it.
To see how Boeing's cash flow reset compares with other potential ideas on your list, it can help to line it up against 30 high quality undervalued stocks.
Does Boeing Look Undervalued on Cash Flow?
The Discounted Cash Flow (DCF) model here focuses on how much cash Boeing could return to shareholders over time. The latest twelve month free cash flow sits at about $527.5m, yet the projections used in the model assume that annual free cash flow recovers into the multi billion dollar range by the early 2030s as current projects and programs mature.
On that cash view, the DCF outcome points to an estimated intrinsic worth that is substantially above the current share price of $196.80. The recently disclosed extra $1.9b in Spirit AeroSystems related liabilities helps explain why the market is placing a discount on Boeing's future cash today, even though the model still sees value supported by those projected cash flows. Find out what Boeing could be worth using our Discounted Cash Flow (DCF) estimate.
The Boeing Narrative: What Would Justify Today's Price?
Narratives pick up where Boeing's valuation puzzle leaves off by spelling out which specific paths for growth, profitability and earnings would need to occur for the stock to trade meaningfully higher or lower than it does today. Each view ties its number to a clear stance on how Boeing's growth, margins and risks could evolve, giving you a reference point you can revisit as fresh information comes through.
Community views on Boeing split around whether the backlog and debt paydown leave more upside or whether recent progress already prices in most of the recovery.
Bull case: 34% undervalued
"Boeing's vast $522 billion commercial backlog, with 5,900 aircraft sold firm into the next decade, positions the company to disproportionately benefit from the expected doubling of global air travel demand by 2040…"
Discover why this Narrative puts Boeing at 34% undervalued.
Bear case: 23% overvalued
"The charge cadence has not stopped… Boeing has a long record of finding new costs inside them…"
Explore why this Narrative puts Boeing at 23% overvalued.
Boeing's price is only one piece of the decision
Before you stop at the cash flow story, it is worth asking who is steering Boeing through this phase and how their pay packets line up with your interests as a shareholder. See who runs Boeing and how they are paid.
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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