Intrinsic value of Boeing - BA

Previous Close

$237.59

  Intrinsic Value

$99.99

stock screener

  Rating & Target

str. sell

-58%

  Value-price divergence*

-128%

Previous close

$237.59

 
Intrinsic value

$99.99

 
Up/down potential

-58%

 
Rating

str. sell

 
Value-price divergence*

-128%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of BA stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 146.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -1.61
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  94,571
  96,462
  98,681
  101,217
  104,064
  107,219
  110,681
  114,450
  118,531
  122,926
  127,644
  132,691
  138,076
  143,810
  149,904
  156,371
  163,223
  170,477
  178,148
  186,253
  194,811
  203,841
  213,364
  223,402
  233,978
  245,117
  256,845
  269,189
  282,179
  295,845
  310,219
Variable operating expenses, $m
 
  89,024
  91,059
  93,386
  95,998
  98,892
  102,068
  105,526
  109,269
  113,301
  117,629
  121,727
  126,667
  131,927
  137,518
  143,450
  149,736
  156,391
  163,428
  170,863
  178,714
  186,998
  195,734
  204,942
  214,645
  224,863
  235,622
  246,946
  258,863
  271,400
  284,586
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  88,737
  89,024
  91,059
  93,386
  95,998
  98,892
  102,068
  105,526
  109,269
  113,301
  117,629
  121,727
  126,667
  131,927
  137,518
  143,450
  149,736
  156,391
  163,428
  170,863
  178,714
  186,998
  195,734
  204,942
  214,645
  224,863
  235,622
  246,946
  258,863
  271,400
  284,586
Operating income, $m
  5,834
  7,438
  7,622
  7,831
  8,066
  8,327
  8,613
  8,925
  9,262
  9,625
  10,015
  10,964
  11,409
  11,883
  12,387
  12,921
  13,487
  14,086
  14,720
  15,390
  16,097
  16,843
  17,630
  18,460
  19,334
  20,254
  21,223
  22,243
  23,316
  24,446
  25,633
EBITDA, $m
  7,744
  9,418
  9,634
  9,882
  10,160
  10,468
  10,806
  11,174
  11,572
  12,001
  12,462
  12,955
  13,480
  14,040
  14,635
  15,266
  15,935
  16,644
  17,393
  18,184
  19,019
  19,901
  20,831
  21,811
  22,843
  23,931
  25,076
  26,281
  27,549
  28,883
  30,287
Interest expense (income), $m
  523
  527
  179
  280
  395
  524
  667
  824
  995
  1,180
  1,380
  1,594
  1,823
  2,068
  2,328
  2,604
  2,898
  3,209
  3,538
  3,886
  4,254
  4,642
  5,052
  5,485
  5,940
  6,420
  6,926
  7,458
  8,018
  8,608
  9,228
Earnings before tax, $m
  5,568
  6,911
  7,443
  7,552
  7,672
  7,803
  7,946
  8,100
  8,266
  8,444
  8,635
  9,370
  9,586
  9,815
  10,059
  10,316
  10,589
  10,878
  11,182
  11,504
  11,843
  12,201
  12,578
  12,975
  13,393
  13,834
  14,297
  14,785
  15,298
  15,838
  16,405
Tax expense, $m
  673
  1,866
  2,010
  2,039
  2,071
  2,107
  2,145
  2,187
  2,232
  2,280
  2,331
  2,530
  2,588
  2,650
  2,716
  2,785
  2,859
  2,937
  3,019
  3,106
  3,198
  3,294
  3,396
  3,503
  3,616
  3,735
  3,860
  3,992
  4,131
  4,276
  4,429
Net income, $m
  4,895
  5,045
  5,433
  5,513
  5,600
  5,696
  5,801
  5,913
  6,035
  6,164
  6,303
  6,840
  6,998
  7,165
  7,343
  7,531
  7,730
  7,941
  8,163
  8,398
  8,645
  8,907
  9,182
  9,472
  9,777
  10,099
  10,437
  10,793
  11,168
  11,562
  11,976

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  10,029
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  89,997
  91,782
  93,893
  96,306
  99,015
  102,016
  105,310
  108,897
  112,779
  116,961
  121,450
  126,252
  131,376
  136,832
  142,630
  148,783
  155,303
  162,205
  169,503
  177,215
  185,358
  193,950
  203,011
  212,561
  222,624
  233,223
  244,382
  256,127
  268,486
  281,489
  295,166
Adjusted assets (=assets-cash), $m
  79,968
  91,782
  93,893
  96,306
  99,015
  102,016
  105,310
  108,897
  112,779
  116,961
  121,450
  126,252
  131,376
  136,832
  142,630
  148,783
  155,303
  162,205
  169,503
  177,215
  185,358
  193,950
  203,011
  212,561
  222,624
  233,223
  244,382
  256,127
  268,486
  281,489
  295,166
Revenue / Adjusted assets
  1.183
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
  1.051
Average production assets, $m
  15,040
  15,338
  15,690
  16,094
  16,546
  17,048
  17,598
  18,198
  18,846
  19,545
  20,295
  21,098
  21,954
  22,866
  23,835
  24,863
  25,953
  27,106
  28,326
  29,614
  30,975
  32,411
  33,925
  35,521
  37,203
  38,974
  40,838
  42,801
  44,866
  47,039
  49,325
Working capital, $m
  12,354
  2,797
  2,862
  2,935
  3,018
  3,109
  3,210
  3,319
  3,437
  3,565
  3,702
  3,848
  4,004
  4,170
  4,347
  4,535
  4,733
  4,944
  5,166
  5,401
  5,650
  5,911
  6,188
  6,479
  6,785
  7,108
  7,449
  7,806
  8,183
  8,580
  8,996
Total debt, $m
  9,952
  3,375
  5,275
  7,447
  9,885
  12,587
  15,551
  18,779
  22,273
  26,037
  30,077
  34,399
  39,011
  43,921
  49,139
  54,676
  60,545
  66,756
  73,325
  80,266
  87,594
  95,327
  103,481
  112,077
  121,134
  130,672
  140,715
  151,286
  162,410
  174,112
  186,421
Total liabilities, $m
  89,180
  82,603
  84,503
  86,675
  89,113
  91,815
  94,779
  98,007
  101,501
  105,265
  109,305
  113,627
  118,239
  123,149
  128,367
  133,904
  139,773
  145,984
  152,553
  159,494
  166,822
  174,555
  182,709
  191,305
  200,362
  209,900
  219,943
  230,514
  241,638
  253,340
  265,649
Total equity, $m
  817
  9,178
  9,389
  9,631
  9,901
  10,202
  10,531
  10,890
  11,278
  11,696
  12,145
  12,625
  13,138
  13,683
  14,263
  14,878
  15,530
  16,220
  16,950
  17,722
  18,536
  19,395
  20,301
  21,256
  22,262
  23,322
  24,438
  25,613
  26,849
  28,149
  29,517
Total liabilities and equity, $m
  89,997
  91,781
  93,892
  96,306
  99,014
  102,017
  105,310
  108,897
  112,779
  116,961
  121,450
  126,252
  131,377
  136,832
  142,630
  148,782
  155,303
  162,204
  169,503
  177,216
  185,358
  193,950
  203,010
  212,561
  222,624
  233,222
  244,381
  256,127
  268,487
  281,489
  295,166
Debt-to-equity ratio
  12.181
  0.370
  0.560
  0.770
  1.000
  1.230
  1.480
  1.720
  1.970
  2.230
  2.480
  2.720
  2.970
  3.210
  3.450
  3.670
  3.900
  4.120
  4.330
  4.530
  4.730
  4.920
  5.100
  5.270
  5.440
  5.600
  5.760
  5.910
  6.050
  6.190
  6.320
Adjusted equity ratio
  -0.115
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4,895
  5,045
  5,433
  5,513
  5,600
  5,696
  5,801
  5,913
  6,035
  6,164
  6,303
  6,840
  6,998
  7,165
  7,343
  7,531
  7,730
  7,941
  8,163
  8,398
  8,645
  8,907
  9,182
  9,472
  9,777
  10,099
  10,437
  10,793
  11,168
  11,562
  11,976
Depreciation, amort., depletion, $m
  1,910
  1,979
  2,013
  2,051
  2,093
  2,141
  2,193
  2,249
  2,310
  2,376
  2,447
  1,990
  2,071
  2,157
  2,249
  2,346
  2,448
  2,557
  2,672
  2,794
  2,922
  3,058
  3,200
  3,351
  3,510
  3,677
  3,853
  4,038
  4,233
  4,438
  4,653
Funds from operations, $m
  13,544
  7,024
  7,446
  7,563
  7,694
  7,837
  7,993
  8,162
  8,345
  8,541
  8,750
  8,831
  9,069
  9,322
  9,591
  9,877
  10,178
  10,498
  10,835
  11,192
  11,568
  11,964
  12,382
  12,823
  13,287
  13,775
  14,290
  14,831
  15,400
  15,999
  16,629
Change in working capital, $m
  3,045
  55
  64
  74
  83
  91
  100
  109
  118
  127
  137
  146
  156
  166
  177
  188
  199
  210
  222
  235
  248
  262
  276
  291
  307
  323
  340
  358
  377
  396
  417
Cash from operations, $m
  10,499
  6,969
  7,381
  7,490
  7,611
  7,746
  7,893
  8,053
  8,227
  8,413
  8,614
  8,684
  8,913
  9,156
  9,415
  9,689
  9,980
  10,287
  10,613
  10,957
  11,319
  11,702
  12,106
  12,532
  12,980
  13,452
  13,950
  14,473
  15,024
  15,603
  16,212
Maintenance CAPEX, $m
  0
  -1,419
  -1,447
  -1,480
  -1,518
  -1,561
  -1,608
  -1,660
  -1,717
  -1,778
  -1,844
  -1,915
  -1,990
  -2,071
  -2,157
  -2,249
  -2,346
  -2,448
  -2,557
  -2,672
  -2,794
  -2,922
  -3,058
  -3,200
  -3,351
  -3,510
  -3,677
  -3,853
  -4,038
  -4,233
  -4,438
New CAPEX, $m
  -2,613
  -298
  -353
  -403
  -453
  -502
  -550
  -599
  -649
  -699
  -750
  -802
  -856
  -912
  -969
  -1,028
  -1,090
  -1,153
  -1,220
  -1,289
  -1,361
  -1,436
  -1,514
  -1,596
  -1,682
  -1,771
  -1,865
  -1,963
  -2,065
  -2,173
  -2,286
Cash from investing activities, $m
  -3,380
  -1,717
  -1,800
  -1,883
  -1,971
  -2,063
  -2,158
  -2,259
  -2,366
  -2,477
  -2,594
  -2,717
  -2,846
  -2,983
  -3,126
  -3,277
  -3,436
  -3,601
  -3,777
  -3,961
  -4,155
  -4,358
  -4,572
  -4,796
  -5,033
  -5,281
  -5,542
  -5,816
  -6,103
  -6,406
  -6,724
Free cash flow, $m
  7,119
  5,253
  5,582
  5,606
  5,640
  5,683
  5,734
  5,794
  5,861
  5,936
  6,020
  5,967
  6,066
  6,173
  6,289
  6,412
  6,545
  6,686
  6,836
  6,996
  7,165
  7,344
  7,534
  7,735
  7,948
  8,172
  8,408
  8,658
  8,920
  9,197
  9,489
Issuance/(repayment) of debt, $m
  -34
  -6,577
  1,900
  2,172
  2,438
  2,702
  2,964
  3,228
  3,494
  3,764
  4,040
  4,322
  4,612
  4,910
  5,218
  5,537
  5,868
  6,212
  6,569
  6,941
  7,328
  7,733
  8,155
  8,596
  9,057
  9,539
  10,043
  10,571
  11,124
  11,703
  12,309
Issuance/(repurchase) of shares, $m
  -6,680
  3,316
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -6,831
  -3,261
  1,900
  2,172
  2,438
  2,702
  2,964
  3,228
  3,494
  3,764
  4,040
  4,322
  4,612
  4,910
  5,218
  5,537
  5,868
  6,212
  6,569
  6,941
  7,328
  7,733
  8,155
  8,596
  9,057
  9,539
  10,043
  10,571
  11,124
  11,703
  12,309
Total cash flow (excl. dividends), $m
  255
  1,993
  7,482
  7,778
  8,078
  8,385
  8,698
  9,021
  9,355
  9,701
  10,059
  10,289
  10,678
  11,083
  11,507
  11,950
  12,413
  12,897
  13,405
  13,936
  14,493
  15,077
  15,689
  16,331
  17,004
  17,710
  18,451
  19,228
  20,044
  20,900
  21,798
Retained Cash Flow (-), $m
  5,518
  -8,361
  -211
  -241
  -271
  -300
  -329
  -359
  -388
  -418
  -449
  -480
  -512
  -546
  -580
  -615
  -652
  -690
  -730
  -771
  -814
  -859
  -906
  -955
  -1,006
  -1,060
  -1,116
  -1,175
  -1,236
  -1,300
  -1,368
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -6,369
  7,271
  7,537
  7,807
  8,084
  8,369
  8,663
  8,967
  9,282
  9,611
  9,809
  10,165
  10,538
  10,927
  11,334
  11,761
  12,207
  12,675
  13,165
  13,679
  14,218
  14,783
  15,376
  15,998
  16,650
  17,335
  18,054
  18,808
  19,600
  20,431
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  -6,106
  6,656
  6,559
  6,429
  6,266
  6,074
  5,852
  5,605
  5,332
  5,038
  4,658
  4,338
  4,007
  3,668
  3,328
  2,989
  2,656
  2,334
  2,027
  1,738
  1,471
  1,227
  1,008
  815
  648
  506
  387
  291
  214
  154
Current shareholders' claim on cash, %
  100
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1
  71.1

The Boeing Company, together with its subsidiaries, designs, develops, manufactures, sells, services, and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight, and launch systems and services worldwide. It operates in five segments: Commercial Airplanes, Boeing Military Aircraft, Network & Space Systems, Global Services & Support, and Boeing Capital. The Commercial Airplanes segment develops, produces, and markets commercial jet aircraft for various passenger and cargo requirements; and provides related support services to the commercial airline industry. This segment also offers aviation services support, aircraft modifications, spare parts, training, maintenance documents, and technical advice to commercial and government customers. The Boeing Military Aircraft segment researches, develops, produces, and modifies manned and unmanned military aircraft, and weapons systems for global strike, vertical lift, and autonomous systems, as well as mobility, surveillance, and engagement. The Network & Space Systems segment researches, develops, produces, and modifies strategic defense and intelligence systems, satellite systems, and space exploration products. The Global Services & Support segment provides integrated logistics services comprising supply chain management and engineering support; maintenance, modification, and upgrades for aircraft; and training systems and government services that include pilot and maintenance training. The Boeing Capital segment offers financing services and manages financing exposure for a portfolio of equipment under operating and finance leases, notes and other receivables, assets held for sale or re-lease, and investments. The company was founded in 1916 and is headquartered in Chicago, Illinois.

FINANCIAL RATIOS  of  Boeing (BA)

Valuation Ratios
P/E Ratio 30
Price to Sales 1.6
Price to Book 179.5
Price to Tangible Book
Price to Cash Flow 14
Price to Free Cash Flow 18.6
Growth Rates
Sales Growth Rate -1.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 6.7%
Cap. Spend. - 3 Yr. Gr. Rate 4.5%
Financial Strength
Quick Ratio 26
Current Ratio 0
LT Debt to Equity 1171.1%
Total Debt to Equity 1218.1%
Interest Coverage 12
Management Effectiveness
Return On Assets 5.8%
Ret/ On Assets - 3 Yr. Avg. 6%
Return On Total Capital 36.2%
Ret/ On T. Cap. - 3 Yr. Avg. 30.8%
Return On Equity 136.9%
Return On Equity - 3 Yr. Avg. 84.1%
Asset Turnover 1
Profitability Ratios
Gross Margin 14.6%
Gross Margin - 3 Yr. Avg. 14.9%
EBITDA Margin 8.5%
EBITDA Margin - 3 Yr. Avg. 9.6%
Operating Margin 6.2%
Oper. Margin - 3 Yr. Avg. 7.4%
Pre-Tax Margin 5.9%
Pre-Tax Margin - 3 Yr. Avg. 7.1%
Net Profit Margin 5.2%
Net Profit Margin - 3 Yr. Avg. 5.5%
Effective Tax Rate 12.1%
Eff/ Tax Rate - 3 Yr. Avg. 21.1%
Payout Ratio 56.3%

BA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BA stock intrinsic value calculation we used $94571 million for the last fiscal year's total revenue generated by Boeing. The default revenue input number comes from 2016 income statement of Boeing. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our BA stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for BA is calculated based on our internal credit rating of Boeing, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Boeing.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of BA stock the variable cost ratio is equal to 92.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for BA stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.3% for Boeing.

Corporate tax rate of 27% is the nominal tax rate for Boeing. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the BA stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for BA are equal to 15.9%.

Life of production assets of 10.6 years is the average useful life of capital assets used in Boeing operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for BA is equal to 2.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $817 million for Boeing - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 615.192 million for Boeing is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Boeing at the current share price and the inputted number of shares is $146.2 billion.

RELATED COMPANIES Price Int.Val. Rating
LMT Lockheed Marti 305.80 203.89  sell
ERJ Embraer ADR 21.62 26.97  buy
SPR Spirit AeroSys 70.19 74.62  buy

COMPANY NEWS

▶ GE bids farewell to oldest Boeing 747 still in service   [Aug-17-17 01:05PM  American City Business Journals]
▶ Passengers sue Boeing for 2016 Emirates crash in Dubai   [Aug-16-17 07:08PM  Associated Press]
▶ Boeing has work to do to meet 2017 delivery goal   [03:55PM  American City Business Journals]
▶ US Market Indexes Mostly Lower Tuesday   [11:06AM  GuruFocus.com]
▶ Boeing, Up Over 50%, Helps Rise in Dow   [10:05AM  24/7 Wall St.]
▶ How to Invest in Military Stocks   [09:16AM  Motley Fool]
▶ Why Boeing expects India to be a $290 billion market over next 20 years   [Aug-14-17 05:20PM  American City Business Journals]
▶ US Market Indexes Gain on Friday   [09:09AM  GuruFocus.com]
▶ Experimental defense unit funds new tech but faces skeptics   [Aug-10-17 10:05PM  Associated Press]
▶ Boeing board elects Caroline Kennedy as a director   [06:55PM  American City Business Journals]
▶ United Airlines suddenly stepping up game in Seattle in a big way   [05:35PM  American City Business Journals]
▶ BUZZ- DJI: From hot to not   [01:38PM  Reuters]
▶ US Market Indexes Lower on Wednesday   [07:56AM  GuruFocus.com]
▶ Boeing: Cramer's Top Takeaways   [06:33AM  TheStreet.com]
▶ Why analysts missed the Boeing rally   [Aug-09-17 07:47PM  CNBC Videos]
▶ Why Boeing Soared More Than 22% in July   [08:34AM  Motley Fool]
▶ Airbus orders off nearly 40 percent through July   [06:40AM  American City Business Journals]
▶ PRESS DIGEST- Canada - Aug 9   [06:27AM  Reuters]
▶ ETFs with exposure to The Boeing Co. : August 8, 2017   [Aug-08-17 04:04PM  Capital Cube]
▶ US Market Indexes Continue to Gain on Monday   [10:38AM  GuruFocus.com]
▶ Air Force signs deal for undelivered 747s for Air Force One   [06:50AM  American City Business Journals]
▶ Competitors SpaceX, Boeing race to launch astronauts next year   [04:31PM  American City Business Journals]
▶ Air Force signs deal for undelivered 747s for Air Force One   [02:30PM  American City Business Journals]
▶ Air Force signs contract for 2 presidential aircraft   [Aug-04-17 06:41PM  Associated Press]
▶ Hot Stocks Near Buy Points Boost Top Dividend Mutual Funds   [11:02AM  Investor's Business Daily]
Stock chart of BA Financial statements of BA
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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