Buying Boeing stock is a great investment, but you should know what to look for when buying it. There are some key factors to consider, including the Market (NYSE) P/E ratio, the Beta ratio, the dividend yield, and the adjusted tally of the ASC606 accounting adjustment. Keeping these in mind will ensure you get the most for your money.
Beta ratio
Whether you’re a new investor or just have questions about Boeing, one of the most important factors to consider is its Beta ratio. This statistic measures the volatility of the company’s stock relative to the market. It can be used to determine whether the stock is undervalued or overvalued.
The beta is calculated by dividing the variance of a stock’s return by the variance of the market’s return. The higher the value, the greater the risk. A positive beta indicates that the stock will outperform the market. Similarly, a negative beta means that the stock will underperform the market.
The average beta of companies in the Industrials sector is 0.93. This statistic is important because it provides insight into the future profitability of the company.
Market (NYSE average) P/E ratio
Using the market (NYSE average) P/E ratio, it is apparent that Boeing is not as cheap as it was a few months ago. The aerospace and defense industry has an average P/E ratio of 21.0. However, Boeing’s P/E ratio is higher than this.
The P/E ratio is one of the most commonly used metrics by analysts to gauge the value of a stock. If the P/E is low, it means that the stock is worth more. If it is high, it indicates that the stock is not worth as much.
A lower P/E ratio means that the stock will take fewer years to recoup its investment. Companies with higher P/Es are likely to grow faster than other firms. This makes them more attractive to investors.
ASC606 adjustments tally
Despite the fact that Boeing received 100 cancellations, it still managed to secure 50 aircraft orders during the month of June. This may not sound like much, but it represents a sizable portion of the 4,239 units in the company’s undeliverable backlog. The best part is, a majority of these are from non-US customers. That means Boeing is able to reap the rewards of the global aviation market without having to worry about a foreign currency exchange rate.
While the ASC 606 adjustments tally has been on the minds of executives, the big question remains: Will Boeing be able to deliver on its latest contract? The Boeing 777X can’t be classified as a firm backlog, as the company is still waiting for FAA approval to move forward with its upcoming fleet of jets.
Dreamliner jets could include confirmed orders and future purchase options
Several analysts are suggesting that Boeing stock could include confirmed orders and future purchase options for its Dreamliner jets. The 787 is a new carbon and titanium aircraft that promises big fuel savings due to its lower weight. The aircraft was originally launched in 2004. The 787 has already secured 464 orders.
The FAA cleared Boeing to resume 787 Dreamliner deliveries in July. This announcement came as a surprise. The airline has been facing production issues and manufacturing flaws. But the company has recently received regulatory approval for its retrofit plan. It also expects to double the number of 737 Max deliveries this year.
Q3 2022 results are expected to trade higher
During the third quarter of 2022, Boeing Co. (NYSE: BA) reported a net loss of -$6.18 per share, or -1.6%, compared to earnings of $0.13 per share in Q3 2021. However, the company’s management stated that it would continue to reduce debt levels. It also stated that its investment-grade credit rating was a priority.
The company’s Global Services segment was driven by margin expansion in the third quarter. The division’s operating profit margin rose to 16.5%, up from 15.3% in Q3 2021. The segment’s profitability improved as a result of a +5% year-over-year increase in segment revenue.
Boeing’s Commercial Airplanes segment is responsible for the development, production, and market of commercial jet aircraft. In addition, the segment provides fleet support services for the commercial airline industry worldwide.
Dividends
Despite its recent scuffles, Boeing is still a highly attractive stock to invest in. The company produces some of the most advanced technology in the aviation industry and has the capacity to produce revolutionary products. Historically, Boeing has paid dividends and repurchased shares to boost shareholder value.
However, a Boeing dividend increase isn’t going to result in a jump in share price. In fact, it may make the company’s share price go the other way.
In addition to a dividend increase, Boeing should also prioritize debt reduction. This will help it to regain its footing. The company will need to borrow up to $1 billion to pay dividends.
