The Boeing Company (BA)

Discount cash flow analysis

5% margin of safety What's this?

Sell Overvalued by 11.4%

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How does this work?

This is an interactive analyst report for The Boeing Company, based on a discounted cash flow valuation approach.

You can modify the assumptions and the valuation will be updated automatically. You can also save and share your valuation.

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Values in $ millions
2007 2008 2009 2010 2011 2012 2013 2014
 
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What will the revenues be in the future?

Growth beyond year three is driven by the terminal growth rate.

Price history

Sensitivity matrix

   
-1% 		Discount Rate %
0%
1%
  -1% $51.79 $51.14 $50.50
Terminal Growth% 0 $51.95 $51.29 $50.65
  +1% $52.11 $51.45 $50.80

How does a change in discount rate or terminal growth affect valuation?

This table shows the sensitivity of the valuation to two key variables - the discount rate and the terminal growth rate

Valuations and comments

  • Valuecruncher created a new valuation of $46.28 (overvalued by 20.06%) - 8 hours ago
  • mmender created a new valuation of $27.02 (overvalued by 44.02%) - 3 months ago
  • aliyooo created a new valuation of $43.96 (undervalued by 6.67%) - 9 months ago
  • aliyooo created a new valuation of $43.96 (undervalued by 6.67%) - 9 months ago
  • TheCrunchBlog created a new valuation of $51.29 (undervalued by 10.11%) - 1 year ago
  • Ashkat created a new valuation of $85.93 (undervalued by 31.07%) - 1 year ago

Comments

Running The Numbers - intrinsic valuation of Boeing ($BA)

This valuation is part of this blog post:

http://blog.valuecruncher.com/2008/11/running-the-numbers-intrinsic-valuation-of-boeing-ba/

Assumptions

Revenue: Reuters aggregates 16 analysts covering $BA and these analysts have mean estimates of 2008 and 2009 revenues of US$68.0 billion and US$72.3 billion respectively. For our analysis we have used US$67.5 billion in 2008, US$72.0 billion in 2009 and US$75.0 billion in 2010.

Profitability: We have used an EBITDA margin of 7.5% in 2008 rising to 8.0% in 2009. Reuters has $BA‘s EBITD margin at 7.0% last year and averaging 10.5% over the last five-years.

Capital Expenditure: We have assumed capital expenditures of US$1.75 billion per annum moving forward.

Discount Rate: 10.0%.

Terminal Growth Rate: 2.5%.

By TheCrunchBlog, about 1 year ago

The boring details

All amounts in millions Figures
Enterprise Value: 41,332
Net Debt (Long-term borrowings less cash): -1,091
Equity Value: 34,135
Number of Shares Outstanding: 732,000,000
Calculated value per share: $51.29

Enterprise Value is the present value of the post-tax cash flows for a business into the future.

Calcuation of EV

Where:

  • C1, C2, C3 - the cash flow in period 1, 2, 3, ...
  • r - the discount rate

To capture the cash flows into the future a terminal value is calculated via a perpetuity calculation -
based on the final years forecast post-tax free cash flow.

Perpetuity

Where:

  • Cn - the cash flow in the final forecast period.
  • LTG - the long-term growth rate
  • r - the discount rate
  • g - the terminal growth rate

The Capital Asset Pricing Model (CAPM) is used to determine the equity component in the discount rate.

CAPM model

Where:

  • rt - the risk free rate
  • t - the tax rate
  • B - the beta of the company
  • MRP - the Market Risk Premium

Valuecruncher uses an estimate of Weighted Average Cost of Capital (WACC) to determine the discount rate in the calculation.