20 Jun Boeing: An Unattractive Risk-Reward Play
Boeing shares have lost 10.2% of their value year-to-date. In this article AeroAnalysis will look whether the Boeing investment is a good on or not. AeroAnalysis will look whether Boeing shares are fairly valued or what would be a fairer value. Additionally, we will explain why Boeing shares might currently not be trading near their fair value.
Boeing investment: Price-to-earnings
Taking into account full year earnings, forecasted at $8.47, and a P/E multiple of 17.55 Boeing could be trading at $148.65 by the time it reports its 2016 full year results.
Boeing investment: Earnings growth
The consensus EPS estimate of $8.47 would imply a share price of $138.91 or 7%.
Using the consensus estimate of $8.47, the PEG-ratio is 1.27. This also signals a slight overpricing.
For the coming 4 years an annual growth of 16% is expected. If we translate this to a PEG-ratio we get a ratio of 1.09.
Boeing investment: Conclusion
Describing Boeing’s current situation: Boeing currently is trading at fair value and does offer some upside looking at the 2016 consensus estimate, but at an unattractive risk-reward ratio. Once the challenging landscape normalizes, Boeing shareholders will benefit from the strong expected earnings growth.