Boeing Outperforms Aerospace Sector in 6 Months: Should You Buy the Stock Now?

Core Viewpoint - Boeing's stock has shown a modest increase of 0.9% over the past six months, contrasting with a decline in the aerospace-defense industry and broader aerospace sector [1]. Group 1: Company Performance - Boeing's performance is less impressive compared to peers like Embraer, Airbus, and RTX Corp., which saw stock increases of 44%, 10.3%, and 6.7% respectively [2]. - The consensus estimate for Boeing's long-term earnings growth rate is 17.4%, surpassing the industry's 11.4% [7]. - Boeing's projected sales for the first quarter of 2025 indicate a 17.3% improvement year-over-year, while full-year 2025 sales are expected to rise by 25.6% [8]. Group 2: Growth Prospects - Rising demand for air travel and the need to replace aging fleets are expected to drive Boeing's growth, with new aircraft offering 25% to 40% improved fuel efficiency [4]. - Boeing anticipates a $4.4 trillion market opportunity in commercial aviation support and services over the next two decades, with a robust backlog of$21.40 billion in its jet service business [5]. - The defense segment secured contracts worth $8 billion in Q4 2024, leading to a backlog of$64.02 billion, enhancing revenue growth prospects [6]. Group 3: Financial Stability - As of the end of 2024, Boeing's cash and cash equivalents totaled $26.28 billion, while long-term debt stood at$52.59 billion, indicating a strong solvency position in the near term [12]. Group 4: Challenges and Risks - Boeing faces challenges such as the ongoing issues with the 737 Max program, which has hindered growth [13]. - Industry-specific challenges, including a shortage of skilled labor and supply chain issues, may impact Boeing's ability to meet demand [16]. - The trailing 12-month return on invested capital (ROIC) is negative, indicating insufficient returns on investments [17]. Group 5: Investment Considerations - Investors may consider waiting for a better entry point due to Boeing's poor ROIC and declining earnings estimates [19]. - Current shareholders may continue to hold the stock, given its solid sales growth potential in 2025 and better performance compared to its sector and industry [20].