BA - Embedded Expectations Analysis - 2019 06 04
The Boeing Company (BA:USA) currently trades above recent averages relative to UAFRS-based (Uniform) Earnings, with a 20.8x Uniform P/E, implying bullish expectations for the firm. However, management has concerns about their operating performance, 737 and 787 production, and the impact of the 737 MAX groundings.Specifically, management may lack confidence in their ability to sustain operating cash performance, manage their operations and liquidity position, and maintain the operating rhythm of the parts of the company not influenced by recent groundings. Also, they may be concerned about their ability to maintain a strong balance sheet, their commitment to deep and rigorous evaluation, and the financial outcomes of the 737 groundings. Furthermore, they may be exaggerating their commitment to safety, and may lack confidence in their ability to improve safety and utilize data to adjust production plans. Additionally, management may be concerned about the impact of the pause in deliveries, decreased production, and lower revenue volumes related to issues with the 737 MAX. Finally, they may be exaggerating single-aisle airplane demand and their ability to sustain 787 production increases.
The Boeing is an aerospace firm. The company's segments include: Commercial Airplanes, which develops, produces and markets commercial jet aircraft and provides fleet support services, mainly to the commercial airline industry; Defense, Space and Security, which engages in the research, development, production and modification of manned and unmanned military aircraft and weapons systems for strike, surveillance and mobility, vertical lift, and commercial derivative aircraft; Global Services, which provides supply chain and logistics management, pilot and maintenance training systems and services, and data analytics and digital services; and Boeing Capital, which manages overall financing exposure.
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