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Stock Analyst Update

Boeing's Consistent Improvement Is Attractive

Better efficiency and diversified product line work for investors.


What Happened?
Boeing (BA) reported Wednesday that sales declined 12% to $51 billion in 2000 as a result of fewer commercial aircraft deliveries. Despite this, free cash flow increased 2% to $4.9 billion, as stellar efficiency led to a 25% improvement in operating margins, to 7.4%. In the fourth quarter alone, margins rose to 9.3% from 6.4% in the third quarter. Thanks to this robust operating performance, Boeing completed its acquisition of Hughes' (GMH) satellite business for cash, finished its 146 million-share repurchase program, authorized a new buyback program for 10% of outstanding shares, and increased its dividend 21%.

What It Means for Investors
We believe that even after appreciating by more than 37% over the past 12 months, Boeing is the most attractive aerospace stock, despite concerns about a slowing economy. Given its decent growth prospects, Boeing looks cheap, trading at a reasonable 9 times operating cash flow, well below the S&P 500 average of 22.

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