What is BA's Intrinsic value?

Boeing Co (BA) Intrinsic Value Analysis

Executive Summary

As of June 26, 2025, Boeing Co's estimated intrinsic value ranges from $13.02 to $93.75 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $93.75 -52.9%
Discounted Cash Flow (5Y) $31.26 -84.3%
Dividend Discount Model (Multi-Stage) $13.02 -93.5%

Is Boeing Co (BA) undervalued or overvalued?

With the current market price at $198.90, the stock appears to be significantly overvalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Boeing Co's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.69 0.79
Cost of equity 7.0% 9.3%
Cost of debt 4.3% 7.0%
Tax rate 6.9% 10.4%
Debt/Equity ratio 0.36 0.36
After-tax WACC 6.2% 8.5%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 7.4% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $66,517 (FY12-2024) to $120,471 (FY12-2034)
  • Net profit margin expansion from -18% to 8%
  • Capital expenditures maintained at approximately 2% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $31 $67,044M 95.4%
10-Year Growth $94 $114,165M 84.1%
5-Year EBITDA $10 $51,230M 94.0%
10-Year EBITDA $90 $111,298M 83.7%

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 8.1%
  • Long-term growth rate: 4.0%
  • Fair value: $13.02 (-93.5% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 9.3% (Low) to 7.0% (High)
  • Long-term growth rate: 3.0% (Low) to 5.0% (High)
  • Fair value range: $(171) to $(679)
  • Selected fair value: $-425.00 (-313.7% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $149973M
Enterprise Value $193449M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 11.85
Current Dividend Yield 4.80%
Dividend Growth Rate (5Y) -11.02%
Debt-to-Equity Ratio 0.36

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Discounted Cash Flow (10Y) 40% $28.13
Discounted Cash Flow (5Y) 33% $7.81
Dividend Discount Model (Multi-Stage) 27% $2.60
Weighted Average 100% $51.39

Investment Conclusion

Based on our comprehensive valuation analysis, Boeing Co's weighted average intrinsic value is $51.39, which is approximately 74.2% below the current market price of $198.90.

Key investment considerations:

  • Strong projected earnings growth (-18% to 8% margin)
  • Consistent cash flow generation

Given these factors, we believe Boeing Co is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.