Intrinsic value of Boeing - BA

Previous Close

$264.75

  Intrinsic Value

$75.33

stock screener

  Rating & Target

str. sell

-72%

  Value-price divergence*

-130%

Previous close

$264.75

 
Intrinsic value

$75.33

 
Up/down potential

-72%

 
Rating

str. sell

 
Value-price divergence*

-130%

*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 154.6

 

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
  507
  -310
  -220
  -118
  -3
  124
  264
  416
  580
  757
  948
  1,151
  1,368
  1,600
  1,845
  2,106
  2,382
  2,675
  2,984
  3,311
  3,656
  4,020
  4,404
  4,809
  5,235
  5,684
  6,157
  6,655
  7,179
  7,730
Earnings before tax, $m
  5,568
  6,931
  7,931
  8,051
  8,184
  8,330
  8,489
  8,661
  8,846
  9,045
  9,257
  10,017
  10,258
  10,515
  10,787
  11,076
  11,381
  11,704
  12,046
  12,406
  12,786
  13,187
  13,610
  14,056
  14,525
  15,019
  15,539
  16,086
  16,661
  17,267
  17,904
Tax expense, $m
  673
  1,871
  2,141
  2,174
  2,210
  2,249
  2,292
  2,338
  2,388
  2,442
  2,499
  2,704
  2,770
  2,839
  2,912
  2,990
  3,073
  3,160
  3,252
  3,350
  3,452
  3,561
  3,675
  3,795
  3,922
  4,055
  4,195
  4,343
  4,499
  4,662
  4,834
Net income, $m
  4,895
  5,060
  5,790
  5,877
  5,975
  6,081
  6,197
  6,322
  6,458
  6,603
  6,758
  7,312
  7,488
  7,676
  7,875
  8,085
  8,308
  8,544
  8,793
  9,056
  9,334
  9,627
  9,935
  10,261
  10,603
  10,964
  11,343
  11,743
  12,163
  12,605
  13,070

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
  81,541
  83,416
  85,560
  87,967
  90,633
  93,560
  96,746
  100,195
  103,911
  107,899
  112,165
  116,717
  121,564
  126,715
  132,181
  137,974
  144,106
  150,590
  157,441
  164,675
  172,309
  180,358
  188,844
  197,784
  207,200
  217,113
  227,548
  238,529
  250,080
  262,231
Adjusted assets (=assets-cash), $m
  79,968
  81,541
  83,416
  85,560
  87,967
  90,633
  93,560
  96,746
  100,195
  103,911
  107,899
  112,165
  116,717
  121,564
  126,715
  132,181
  137,974
  144,106
  150,590
  157,441
  164,675
  172,309
  180,358
  188,844
  197,784
  207,200
  217,113
  227,548
  238,529
  250,080
  262,231
Revenue / Adjusted assets
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
  1.183
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
  -5,842
  -4,154
  -2,224
  -58
  2,342
  4,976
  7,843
  10,947
  14,292
  17,881
  21,720
  25,817
  30,180
  34,816
  39,735
  44,949
  50,467
  56,303
  62,469
  68,980
  75,850
  83,095
  90,731
  98,777
  107,252
  116,174
  125,565
  135,448
  145,844
  156,780
Total liabilities, $m
  89,180
  73,386
  75,074
  77,004
  79,170
  81,570
  84,204
  87,071
  90,175
  93,520
  97,109
  100,948
  105,045
  109,408
  114,044
  118,963
  124,177
  129,695
  135,531
  141,697
  148,208
  155,078
  162,323
  169,959
  178,005
  186,480
  195,402
  204,793
  214,676
  225,072
  236,008
Total equity, $m
  817
  8,154
  8,342
  8,556
  8,797
  9,063
  9,356
  9,675
  10,019
  10,391
  10,790
  11,216
  11,672
  12,156
  12,672
  13,218
  13,797
  14,411
  15,059
  15,744
  16,468
  17,231
  18,036
  18,884
  19,778
  20,720
  21,711
  22,755
  23,853
  25,008
  26,223
Total liabilities and equity, $m
  89,997
  81,540
  83,416
  85,560
  87,967
  90,633
  93,560
  96,746
  100,194
  103,911
  107,899
  112,164
  116,717
  121,564
  126,716
  132,181
  137,974
  144,106
  150,590
  157,441
  164,676
  172,309
  180,359
  188,843
  197,783
  207,200
  217,113
  227,548
  238,529
  250,080
  262,231
Debt-to-equity ratio
  12.181
  -0.720
  -0.500
  -0.260
  -0.010
  0.260
  0.530
  0.810
  1.090
  1.380
  1.660
  1.940
  2.210
  2.480
  2.750
  3.010
  3.260
  3.500
  3.740
  3.970
  4.190
  4.400
  4.610
  4.800
  4.990
  5.180
  5.350
  5.520
  5.680
  5.830
  5.980
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
  5,060
  5,790
  5,877
  5,975
  6,081
  6,197
  6,322
  6,458
  6,603
  6,758
  7,312
  7,488
  7,676
  7,875
  8,085
  8,308
  8,544
  8,793
  9,056
  9,334
  9,627
  9,935
  10,261
  10,603
  10,964
  11,343
  11,743
  12,163
  12,605
  13,070
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
  7,039
  7,802
  7,928
  8,068
  8,222
  8,390
  8,572
  8,768
  8,979
  9,205
  9,302
  9,560
  9,833
  10,123
  10,431
  10,757
  11,101
  11,465
  11,850
  12,256
  12,684
  13,136
  13,612
  14,113
  14,640
  15,196
  15,780
  16,396
  17,042
  17,723
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
  6,984
  7,738
  7,855
  7,985
  8,130
  8,289
  8,462
  8,650
  8,851
  9,068
  9,156
  9,403
  9,667
  9,946
  10,243
  10,558
  10,891
  11,243
  11,615
  12,008
  12,423
  12,860
  13,321
  13,806
  14,317
  14,856
  15,422
  16,019
  16,646
  17,306
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
  5,268
  5,938
  5,971
  6,014
  6,068
  6,131
  6,203
  6,284
  6,375
  6,474
  6,439
  6,557
  6,684
  6,820
  6,967
  7,123
  7,289
  7,466
  7,654
  7,853
  8,065
  8,288
  8,524
  8,773
  9,037
  9,314
  9,607
  9,916
  10,241
  10,583
Issuance/(repayment) of debt, $m
  -34
  -15,410
  1,688
  1,929
  2,166
  2,400
  2,634
  2,868
  3,104
  3,344
  3,589
  3,840
  4,097
  4,362
  4,636
  4,920
  5,213
  5,519
  5,836
  6,166
  6,511
  6,870
  7,245
  7,637
  8,046
  8,474
  8,922
  9,391
  9,882
  10,397
  10,936
Issuance/(repurchase) of shares, $m
  -6,680
  11,922
  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
  -3,488
  1,688
  1,929
  2,166
  2,400
  2,634
  2,868
  3,104
  3,344
  3,589
  3,840
  4,097
  4,362
  4,636
  4,920
  5,213
  5,519
  5,836
  6,166
  6,511
  6,870
  7,245
  7,637
  8,046
  8,474
  8,922
  9,391
  9,882
  10,397
  10,936
Total cash flow (excl. dividends), $m
  255
  1,781
  7,626
  7,900
  8,180
  8,468
  8,764
  9,070
  9,388
  9,719
  10,063
  10,279
  10,654
  11,046
  11,456
  11,886
  12,336
  12,808
  13,302
  13,820
  14,364
  14,934
  15,533
  16,161
  16,819
  17,511
  18,237
  18,998
  19,798
  20,637
  21,518
Retained Cash Flow (-), $m
  5,518
  -16,982
  -188
  -214
  -241
  -267
  -293
  -319
  -345
  -372
  -399
  -427
  -455
  -485
  -515
  -547
  -579
  -613
  -648
  -685
  -723
  -763
  -805
  -849
  -894
  -942
  -991
  -1,043
  -1,098
  -1,155
  -1,215
Prev. year cash balance distribution, $m
 
  9,645
  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
 
  -5,556
  7,439
  7,686
  7,940
  8,201
  8,471
  8,752
  9,043
  9,347
  9,664
  9,852
  10,199
  10,561
  10,941
  11,339
  11,757
  12,195
  12,654
  13,135
  13,641
  14,171
  14,728
  15,312
  15,925
  16,569
  17,245
  17,955
  18,700
  19,482
  20,303
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
 
  -5,327
  6,810
  6,689
  6,538
  6,357
  6,148
  5,913
  5,652
  5,370
  5,067
  4,679
  4,352
  4,016
  3,673
  3,329
  2,988
  2,653
  2,330
  2,022
  1,733
  1,466
  1,222
  1,004
  811
  645
  503
  385
  289
  213
  153
Current shareholders' claim on cash, %
  100
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

The Boeing Company is an aerospace company. The Company's segments include Commercial Airplanes; Defense, Space & Security (BDS), such as Boeing Military Aircraft (BMA), Network & Space Systems (N&SS) and Global Services & Support (GS&S), and Boeing Capital (BCC). The Commercial Airplanes segment develops, produces and markets commercial jet aircraft and provides related support services, to the commercial airline industry. The Commercial Airplanes segment also produces commercial aircraft and offers a family of commercial jetliners. The BDS segment's operations involve research, development, production, modification and support of the products and related systems. The BMA segment is engaged in the research, development, production and modification of manned and unmanned military aircraft and weapons systems. The BCC segment's portfolio consists of equipment under operating leases, finance leases, notes and other receivables, assets held for sale or re-lease and investments.

FINANCIAL RATIOS  of  Boeing (BA)

Valuation Ratios
P/E Ratio 33.4
Price to Sales 1.7
Price to Book 200
Price to Tangible Book
Price to Cash Flow 15.6
Price to Free Cash Flow 20.7
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 584.043 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 $154.6 billion.

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COMPANY NEWS

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▶ Delta CEO Bastian: Amazon would be 'well served' coming to Atlanta   [Oct-18-17 09:05PM  American City Business Journals]
▶ [$$] Delta Expects to Buy U.S.-Built CSeries Jets   [12:33PM  The Wall Street Journal]
▶ [$$] Boeings Bombardier Fight Blows Up in Its Face   [12:04AM  The Wall Street Journal]
▶ [$$] Boeing's Thorny Situation   [06:09PM  Barrons.com]
▶ India's Jet Airways eyes order for another 75 Boeing 737 Maxes   [06:05PM  American City Business Journals]
▶ This Is How Boeing Could Get Squeezed By Airbus, Bombardier   [04:28PM  Investor's Business Daily]
▶ Trump: Greece looking to buy additional Boeing planes   [02:47PM  Fox Business Videos]
▶ Bombardier CEO: Airbus C Series deal means no U.S. tariffs   [01:55PM  American City Business Journals]
▶ Boeing is Still Propelling the Dow's Gains   [11:24AM  The Wall Street Journal]
▶ Airbus saves Bombardier, rebuffs U.S. threat   [10:02AM  Reuters Videos]
▶ Stocks Rise As Dow Nears 23,000, UnitedHealth, J&J Lead Dow   [09:41AM  Investor's Business Daily]
▶ [$$] Boeing's Bombardier Fight Blows Up in Its Face   [09:15AM  The Wall Street Journal]
▶ [$$] Airbus/Bombardier: more fear than love   [08:30AM  Financial Times]
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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