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Stock Analysis: Boeing Company

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Stock Analysis: Boeing Company
Ashutosh Kr.Sinha (DSI# d03252878)
730 Santana Drive
Corona Del Mar, CA 92625
Email: ashutosh_sinha55@yahoo.com
(949) 719 2955
FI560 Securities Analysis
Miriam Benard
June 08, 2011

Abstract
The purpose of this paper is to make buy or sell recommendation for the Boeing Company’s stock based on the technical analysis and fundamental analysis. The technical analysis consists of analysis of return on equity; the company’s projected future growth of earnings; an analysis of its required rate of return using the CAPM measurement; and the company’s intrinsic value using the discount valuation technique. The fundamental analysis consists of describing the competitive forces in the industry …show more content…

Analysis of the Return on Equity using DuPont System Table B. Boeing Company DuPont Analysis of ROE | | | | | | Component | | Definition | | 2010 | 2009 | Tax burden | | Net profit / Pretax profit | | 73% | 76% | Interest burden | | Pretax profit/EBIT | | 0.9 | 0.8 | Profit margin | | EBIT/Sales | | 10% | 4% | Asset turnover | | Sales/Asset | | 0.8 | 0.9 | Leverage | | Assets/Equity | | 24.8 | 29.2 | Using the Du Pont formula: | | | | | ROE (2010)= | .734X.897X.096X.767X24.789= | | | 120% | ROE (2009)= | .758X.836X.036X.919X29.160= | | | 62% |

Table B compares the changes in the five components of ROE for the Boeing Company from 2009 to 2010. The tax-burden decreased slightly in 2010 from 2009, thus contributing to the decrease in the ROE. The interest burden increased slightly in 2010 from 2009, thus contributing to the increase in the ROE. The profit margin increased significantly in 2010 from 2009, thus contribution to the increase in the ROE. The asset turnover decreased slightly in 2010 form 2009, thus contributing to the decrease in the ROE. The financial leverage declined in 2010 from 2009, thus contributing to the decline in the ROE. Since total increase in interest burden and profit margin was substantially more than the total decrease in the tax burden,

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