boeing (BA – Free Report) is one of the most searched stocks on Zacks.com these days. So it's worth looking at some facts that could shape the stock's performance in the short term.
The aircraft manufacturer's stock has returned +0.5% over the past month versus a +4% change in the Zacks S&P 500 Composite Index. The Zacks Aerospace & Defense industry, which includes Boeing, has gained 1.5% in the period. The key question here is where the stock is likely to go in the short term.
While media releases and rumors about significant changes in a company's business prospects typically cause its stock to “trend” and lead to immediate price movements, there are some fundamentals that ultimately govern buy-and-hold decisions. There are always facts.
Regarding revisions to performance forecasts
Zacks prioritizes evaluating changes in a company's future earnings expectations above all else. That's because we believe that the present value of future income streams determines the fair value of a stock.
Our analysis is fundamentally based on how the sell-side analysts covering a given stock are revising their earnings estimates to account for the latest business trends. As a company's earnings expectations rise, so does the fair value of its stock. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, which causes the stock price to rise. For this reason, empirical research has shown that there is a strong correlation between trends in earnings forecast revisions and short-term stock price movements.
Boeing is expected to report a loss of $0.33 per share for the current quarter, representing a +74% change from the year-ago period. Over the past 30 days, the Zacks Consensus Estimate has moved -299.7%.
The consensus earnings estimate for the current fiscal year of $2.55 represents a year-over-year change of +143.9%. This estimate has changed -28.8% over the past 30 days.
Next year's consensus earnings estimate of $7.59 represents a +197.5% change from the earnings Boeing was expected to report a year ago. Over the past month, the forecast has changed by -7%.
The Zacks Rank, a proprietary stock evaluation tool with an impressive, outside-audited track record of impressive results, harnesses the power of earnings estimate revisions to be a more conclusive indicator of a stock's short-term price performance. . The magnitude of the recent consensus estimate change, along with three other factors related to the earnings estimate, has given Boeing a Zacks Rank of #4 (Sell).
The chart below shows the company's consensus EPS estimate over the next 12 months over time.
12 months EPS
Revenue growth forecast
There's no question that a company's profit growth is the best indicator of its financial health, but nothing will happen if it doesn't make a profit. It's nearly impossible for a company to expand its bottom line without growing it over the long term. Therefore, it's important to know a company's earnings growth potential.
For Boeing, the consensus revenue estimate for the current quarter is $20.12 billion, representing a year-over-year change of +12.3%. Estimates for the current and next fiscal year are $89.67 billion and $100.12 billion, representing changes of +15.3% and +11.6%, respectively.
Last reported results and surprising details
Boeing reported revenue of $22.02 billion in its last reported quarter, representing a +10.2% change from the year-ago period. EPS for the same period was -$0.47, compared to -$1.75 a year ago.
The reported earnings represent a surprise of +3.73% when compared to the Zacks Consensus Estimate of $21.23 billion. EPS surprise was +34.72%.
Over the last four quarters, Boeing has surpassed consensus EPS estimates two times. The company has surpassed consensus revenue estimates three times during this period.
evaluation
You cannot make efficient investment decisions without considering stock valuation. Whether a stock's current price accurately reflects the intrinsic value of the underlying business and the company's growth prospects is a key determinant of future stock performance.
The present value of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), and the past value of your company Comparing a company to its peers based on these parameters can help you see if it is overvalued, overvalued or undervalued, but how reasonable its stock is You can get a good idea of what
The Zacks Value Style Score (part of the Zacks Style Scores system) pays close attention to both traditional and non-traditional valuation metrics and rates stocks from A to F, where A is better than B. , B is better than C, A is better than B, and B is better than C). ), can be very helpful in identifying whether a stock is overvalued, properly valued, or temporarily undervalued.
Boeing is rated D on this score, indicating that it trades at a premium relative to its industry peers. Click here to see the values of some of the metrics that determined this grade.
conclusion
The facts discussed here, and much of the other information on Zacks.com, may help you decide whether the market buzz about Boeing is worth paying attention to. However, the company's Zacks Rank #4 suggests it may underperform the broader market in the short term.
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