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Stock Analyst Update

Compelling Valuation Makes Boeing Attractive

Growing free cash flow will propel future shareholder gains.


At a compelling valuation of seven times cash flow--half its three-year average--Boeing  (BA) offers patient investors substantial upside. The continued turnaround of Boeing's Commercial Airplanes Group, a large pipeline of military and commercial aircraft orders, and growing free cash flow bode well for future gains.

In the first six months of 2000, Boeing’s operating margin increased by one percentage point to 6.2%, with the best results coming from commercial airplanes. New aircraft orders boosted Boeing's free cash flow to $1.7 billion and led management to raise full-year free cash flow estimates from $2.5 billion to between $3 billion and $4 billion. Cash advances for new orders were largely responsible for the increase, but efficiency improvements also had a positive impact.

Richard Wilson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.