BA - Embedded Expectations Analysis - 2021 03 18
The Boeing Company (BA:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 79.4x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about production costs, their government-oriented defense businesses, and the 737 programSpecifically, management may lack confidence in their ability to mitigate abnormal production and rework costs, recover cash margins back to pre-pandemic levels, and maintain the stability of their government services and defense, space & security businesses. Furthermore, they may have concerns about 777 freighter demand, increased market competition and the sustainability of their competitive pricing advantage over Airbus's planes. They may also lack confidence in their ability to sustain the progress on the 737 resumption this quarter, maintain pandemic-driven cost benefits in the long-run, and successfully execute their extensive business transformation efforts. Moreover, management may have concerns about inventory build-up and potential delays in their pre-delivery payments (PDP)
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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