To The Moon

Public Holidays

Hong Kong is closed on Monday, 21April25, as they celebrate Easter.

Economic Calendar (21Apr25)

Notable Highlights

• S&P Global Manufacturing PMI (Apr): Forecast 49.3 is suggesting a contraction in manufacturing activity (below 50 signals contraction).

• S&P Global Services PMI (Apr): Forecast 52.9 is showing slower growth in the services sector (above 50 signals expansion).

• New Home Sales (Mar) Forecast 680K, slightly above the last update of 676K, suggesting a modest uptick in housing market activity.

• Durable Goods Orders (Mar) at 20:30: Actual 1.5%, above the forecast of 1.0%, reflecting stronger-than-expected demand for long-lasting goods.

• Existing Home Sales (Mar) Forecast 4.14M, below the last reported 4.26M, indicating weaker-than-expected home sales.

• Initial jobless claims will be announced. This weekly report tracks the number of new unemployment claims, serving as a leading indicator of labor market health. The Federal Reserve uses this as one of the key macro data references as it balances inflation and employment in the economy.

• Crude Oil Inventories can be seen as forward indicators of market demand and consumption. This event tracks the weekly change in U.S. crude oil inventories, an indicator of oil supply and demand, which can impact oil prices and energy markets. If the trend of excess inventories continues, demand erosion can lead to reduced production & weakened consumer spending.

Earnings Calendar (21Apr25)

I am interested in Tesla, Alphabet, IBM, SAP, Boeing and Northrop Grumman earnings.

Boeing’s recent performance

Boeing’s stock price has fallen 4.7% from a year ago. The technical analysis has a “Neutral” rating. From Analysts Sentiment, it has a “Buy” rating. With a price target of $193.04, Boeing’s stock has an upside of 19.24%.

Here’s a summary of Boeing’s performance over the last 10 years, focusing on revenue, operating profits, earnings per share (EPS), dividends, price-to-earnings (P/E) ratio, free cash flow (FCF), and other key metrics that highlight its growth and competitive advantages.

Revenue

• Growth Trend: Boeing's revenue has fluctuated significantly, starting at $96.114 billion in 2015, peaking at $101.127 billion in 2018, and declining to $66.517 billion in 2024. The 10-year compound annual growth rate (CAGR) for revenue is -3.1%, indicating an overall decline.

• Key Milestones: Revenue saw sharp declines in 2019 (-24.3%) and 2020 (-24.0%) due to the 737 MAX crisis and the COVID-19 pandemic’s impact on aviation. Growth resumed in 2021 (7.1%) and 2023 (16.8%), but 2024 saw another decline (-14.5%).

• Competitive Advantage: Despite the revenue decline, Boeing remains a key player in aerospace and defence, benefiting from its duopoly with Airbus in commercial aviation and strong defence contracts. However, operational challenges have impacted growth.

Operating Profit

• Growth Trend: Operating profit has been highly volatile, dropping from $7.170 billion in 2015 to a loss of -$10.824 billion in 2024. Significant losses were recorded in 2019 (-$2.662 billion), 2020 (-$12.978 billion), and 2024, reflecting ongoing challenges.

• Operating Margin: The company has been making losses since 2019 with the worst loss of over $12 billion in 2020.

• Competitive Advantage: Boeing’s inability to maintain profitability highlights significant operational and regulatory challenges.

Earnings Per Share (EPS)

• Growth Trend: EPS has been erratic, starting at $7.44 in 2015, peaking at $17.85 in 2018, and dropping to -$18.36 in 2024. The 10-year EPS CAGR is negative, given the consistent losses since 2019.

• Volatility: EPS growth was strong in 2017 (76.9%) and 2018 (28.9%), but turned negative with a -106.3% drop in 2019, followed by further losses in 2020 (-764.3%) and 2024 (-400.3%).

• Competitive Advantage: The persistent negative EPS reflects Boeing’s struggles with profitability, driven by the 737 MAX issues and supply chain disruptions.

Price-to-Earnings (P/E) Ratio

• Valuation: The P/E ratio is negative at -10.3, reflecting the 2024 earnings loss and market uncertainty about Boeing’s near-term profitability.

• 10-Year Median Returns: The 10-year median return on assets (ROA) is -1.1%, return on equity (ROE) is 78.8%, and return on invested capital (ROIC) is -4.8%, indicating mixed performance with high ROE driven by leverage but negative ROA and ROIC.

• Competitive Advantage: The negative P/E and ROIC highlight Boeing’s challenges, but its high ROE (due to a leveraged balance sheet) suggests potential for recovery if operational issues are resolved.

Free Cash Flow (FCF)

• Growth Trend: The EV/FCF ratio is -10.4, indicating negative free cash flow, consistent with Boeing’s financial struggles. The 10-year median FCF margin is 4.8%, but recent years show significant cash burn.

• Capital Structure: The median debt/equity ratio is -3.1, and debt/assets is 0.3, reflecting high leverage and negative equity due to accumulated losses.

• Competitive Advantage: Negative FCF limits Boeing’s financial flexibility, but its backlog of orders and defence contracts provides a pathway to improve cash flows if production stabilises.

Overall Assessment

Over the past 10 years, Boeing has faced significant challenges, with revenue declining at a -3.1% CAGR, driven by the 737 MAX crisis, the COVID-19 pandemic, and production issues. Operating profits and EPS have been consistently negative since 2019, with 2024 showing a substantial loss (-$10.824 billion operating profit, -$18.36 EPS). The suspension of dividends since 2020 and negative FCF (-10.4 EV/FCF) reflect financial strain, while the negative P/E (-10.3) and ROIC (-27.8% in 2024) indicate market scepticism about near-term recovery.

From the recent news, Boeing is facing some headwind from China as part of the tariffs collateral.

Boeing’s recent performance

(Extract from Grok using a framework with some minor edit)

Revenue

• Growth Trend: Boeing's revenue has fluctuated significantly, starting at $96.114 billion in 2015, peaking at $101.127 billion in 2018, and declining to $66.517 billion in 2024. The 10-year compound annual growth rate (CAGR) for revenue is -3.1%, indicating an overall decline.

• Key Milestones: Revenue saw sharp declines in 2019 (-24.3%) and 2020 (-24.0%) due to the 737 MAX crisis and the COVID-19 pandemic’s impact on aviation. Growth resumed in 2021 (7.1%) and 2023 (16.8%), but 2024 saw another decline (-14.5%).

• Competitive Advantage: Despite the revenue decline, Boeing remains a key player in aerospace and defence, benefiting from its duopoly with Airbus in commercial aviation and strong defence contracts. However, operational challenges have impacted growth.

Operating Profit

• Growth Trend: Operating profit has been highly volatile, dropping from $7.170 billion in 2015 to a loss of -$10.824 billion in 2024. Significant losses were recorded in 2019 (-$2.662 billion), 2020 (-$12.978 billion), and 2024, reflecting ongoing challenges.

• Operating Margin: The operating margin deteriorated from 7.5% in 2015 to -16.3% in 2024, with negative margins in most years post-2018 due to the 737 MAX grounding, production issues, and pandemic effects.

• Competitive Advantage: Boeing’s inability to maintain profitability highlights significant operational and regulatory challenges. However, its established position in aerospace and defence provides a foundation for potential recovery.

Earnings Per Share (EPS)

• Growth Trend: EPS has been erratic, starting at $7.44 in 2015, peaking at $17.85 in 2018, and dropping to -$18.36 in 2024. The 10-year EPS CAGR is not provided, but is negative given the consistent losses since 2019.

• Volatility: EPS growth was strong in 2017 (76.9%) and 2018 (28.9%), but turned negative with a -106.3% drop in 2019, followed by further losses in 2020 (-764.3%) and 2024 (-400.3%).

• Competitive Advantage: The persistent negative EPS reflects Boeing’s struggles with profitability, driven by the 737 MAX issues and supply chain disruptions. However, its long-term role in aviation could support a turnaround.

Dividends

• Growth Trend: Dividends per share increased from $3.64 in 2015 to $8.22 in 2019, with growth rates like 24.7% in 2015 and 20.4% in 2018. However, Boeing suspended dividends in 2020 due to financial pressures and has not resumed them through 2024.

• Consistency: The suspension of dividends reflects Boeing’s focus on preserving cash during its financial challenges.

• Competitive Advantage: The lack of dividends reduces its appeal to income-focused investors, but the prior history of dividend growth shows Boeing’s potential to return value to shareholders once financial stability is restored.

Price-to-Earnings (P/E) Ratio

• Valuation: The P/E ratio is negative at -10.3, reflecting the 2024 earnings loss and market uncertainty about Boeing’s near-term profitability.

• 10-Year Median Returns: The 10-year median return on assets (ROA) is -1.1%, return on equity (ROE) is 78.8%, and return on invested capital (ROIC) is -4.8%, indicating mixed performance with high ROE driven by leverage but negative ROA and ROIC.

• Competitive Advantage: The negative P/E and ROIC highlight Boeing’s challenges, but its high ROE (due to a leveraged balance sheet) suggests potential for recovery if operational issues are resolved.

Free Cash Flow (FCF)

• Growth Trend: The EV/FCF ratio is -10.4, indicating negative free cash flow, consistent with Boeing’s financial struggles. The 10-year median FCF margin is 4.8%, but recent years show significant cash burn.

• Capital Structure: The median debt/equity ratio is -3.1, and debt/assets is 0.3, reflecting high leverage and negative equity due to accumulated losses.

• Competitive Advantage: Negative FCF limits Boeing’s financial flexibility, but its backlog of orders and defence contracts provides a pathway to improve cash flows if production stabilises.

Other Key Metrics

• Gross Profit and Margin: Gross profit declined from $14.026 billion in 2015 to a loss of -$1.991 billion in 2024. The gross margin turned negative at -3.0% in 2024, down from 14.6% in 2015, reflecting production inefficiencies and cost overruns.

• Return on Invested Capital (ROIC): ROIC dropped from 30.2% in 2015 to -27.8% in 2024, with a 10-year median of -4.8%, indicating poor capital efficiency in recent years.

• Competitive Advantage: The negative gross margin and ROIC highlight Boeing’s operational challenges, but its strong backlog and position in aerospace and defense provide a competitive foundation for recovery.

Overall Assessment

Over the past 10 years, Boeing has faced significant challenges, with revenue declining at a -3.1% CAGR, driven by the 737 MAX crisis, the COVID-19 pandemic, and production issues. Operating profits and EPS have been consistently negative since 2019, with 2024 showing a substantial loss (-$10.824 billion operating profit, -$18.36 EPS). The suspension of dividends since 2020 and negative FCF (-10.4 EV/FCF) reflect financial strain, while the negative P/E (-10.3) and ROIC (-27.8% in 2024) indicate market scepticism about near-term recovery. Despite these challenges, Boeing’s competitive advantages include its duopoly in commercial aviation, strong defence contracts, and a massive order backlog, which could drive future growth if operational and regulatory hurdles are addressed.

The EPS and revenue forecast are -1.25 and 19.49B, respectively. Given the above data, I prefer to avoid Boeing for now.

@TigerStars

$Boeing(BA)$