Boeing BA , Co is the leading engineer and manufacturer of everything aerospace, from jumbo jets to air defense systems. Unfortunately, that doesn’t mean that 2020 has been kind to them – in fact, just the opposite, as the company has bled more than $15 billion in 9 months.
The hemorrhaging began last year when the company was forced to ground all 400 of its 737 MAX airframes on the back of two fatal crashes. When the coronavirus pandemic hit, Boeing’s woes increased tenfold as airliner after airliner cancelled contracts they could no longer afford, leaving Boeing with hundreds of planes – and nowhere to fly.
But now, the company’s luck may be about to change, as the FAA (Federal Aviation Administration) has finally cleared the Boeing 737 MAX for takeoff. After 20 months of investigation and missed deadlines, the company has announced that they’ve patched the faulty software – a few bits of errant code in the system designed to the keep the plane level in mid-flight.
The sign-off from the FAA should help to waylay fears and criticism from governments and airliners around the world. The company is predicting that many other countries will soon follow soon, from Canada to Europe, though when – or if – China will recertify the 737 is unclear. Boeing is now free to place the 400 airframes built but not delivered during ground.
Now, their struggle will be selling into a lukewarm market wary of past fatal mishaps.
In recent statements, Boeing has admitted that it’s preparing to face depressed demand for years to come, especially for its international-sized products. In addition to the 6,700 employees slashed thus far, the company has intentions to reduce staff further as it scales down production rates across the board – down to a handful of planes each month by mid-2021.
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So, What Does this Have to Do with their Stock?
All of these factors contribute to the current state of Boeing’s stock – which, unfortunately, is nowhere near pre-pandemic highs. However, just because Boeing clocked an Unattractive rating last month doesn’t mean there’s no money to be made for the savvy investor this month.
That’s why Q.ai’s deep learning algorithm is here to help. Our AI (artificial intelligence) provides an in-depth look at the current state of investments of all shapes and sizes so you don’t have to do the digging yourself.
Without further ado, let’s take a closer look at Boeing’s financial state.
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Boeing Co (BA) by the Numbers
Boeing, Co closed down 3.2% on Wednesday evening, finishing the midweek at $203.30 on volume of 65.7 million trades – almost double the week’s average volume.
And, although Boeing closed down Wednesday, its stock has been steadily trending upward over the past few weeks, as evidenced in the 22-day price average of $169.22.
Overall, the company’s stock is sitting down 38.6% for the year. Boeing’s EPS is in the tank, as well – per-share earnings are sitting at a woeful $1.12, down from $13.85 36 months prior.
The company’s other financial metrics are also down across the board due to a combination of long-term trends (thank the 737 MAX), as well as the increased costs and decreased demand of the coronavirus pandemic.
For instance, Boeing’s revenue clocks in just below $76.7 billion in the last fiscal year compared to a much healthier $94 billion in incoming cash flow. Similarly, the company’s operating income has shrunk to a paltry $2.1 billion against an eye-popping $10.1 billion three years ago.
On the bright side, though, Boeing’s forward 12-month revenue has little recourse but to grow. As such, the company is expected to see nearly 25% growth over the next year.
So, What’s the Verdict?
Boeing is a good company in a bad situation, but it seems that for a time, their luck may take a turn for the better. Stock prices are steadily trending up, their hallmark 737 line is cleared for takeoff, and current market interest has swirled trades up to nearly 70 million in a day.
However, if prospects are improving, this is the first in a long series of hoops Boeing will have to leap through in order to turn a profit again. While the stock is on its way up, it’s certain to slip again as good news fades and investor interest waves. And, with the current reality of air travel leading to tepid markets at best, it will be months – or even years – before it’s able to offload more than a handful of its grounded fleet.
And it’s not just us.
Our AI has seen the writing on the wall, too, as evidenced by Boeing’s below-average report card: C in Technicals, D’s in Growth and Low Momentum Volatility, and a big, fat F in Quality Value. As a result, Boeing is rated a Top Short for the month of November. Buy if you want to ride the high – but don’t forget to get out before the water gets too cold.
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