Boeing Co. shares have lagged the S&P 500 in, gaining just 8.4 percent year-to-date.
Earnings
A price-to-earnings ratio (PE) is one of the most basic fundamental metrics for gauging a stock’s value. The lower the PE, the higher the value.Growth
Looking ahead to the next four quarters, the S&P 500’s forward PE ratio looks much more reasonable at just 21.4. Boeing’s forward earnings multiple of 54 is more than double the S&P 500’s, making Boeing’s stock look overvalued.Boeing’s forward PE ratio is also more than double its industrial sector peers, which are averaging a 21.1 forward earnings multiple.
Yet when it comes to evaluating a stock, earnings aren’t everything.
The growth rate is also critical for companies that are rapidly building their bottom lines. The price-to-earnings-to-growth ratio (PEG) is a good way to incorporate growth rates into the evaluation process. The S&P 500’s overall PEG is about 1.0. Once again, without positive earnings, Boeing doesn’t have a positive PEG ratio to use as a valuation gauge.
Price-to-sales (PS) ratio is another important valuation metric, particularly for unprofitable companies and growth stocks. The S&P 500’s PS ratio is 3.2, well above its long-term average of 1.63. Boeing’s PS ratio is 2.04, slightly above the S&P 500 average. Boeing’s PS ratio is also up 110.3 percent over the past five years, suggesting the stock is priced at the high end of its historical valuation range.
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