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
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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,
The Boeing Company designs, develops, manufactures, sells, services, and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight, and launch systems and services worldwide. It operates in five segments: Commercial Airplanes, Boeing Military Aircraft, Network & Space Systems, Global Services & Support, and Boeing Capital. The Commercial Airplanes segment develops, produces, and markets commercial jet aircraft for various passenger and cargo requirements; and provides related support services to the commercial airline industry. This segment also offers aviation services support, aircraft modifications, spare parts, training, maintenance documents, and technical advice to commercial and government customers. The Boeing Military Aircraft segment researches, develops, produces, and modifies manned and unmanned military aircraft, and weapons systems for global strike, vertical lift, and autonomous systems, as well as mobility, surveillance, and engagement. The Network & Space Systems segment researches, develops, produces, and modifies strategic defense and intelligence systems, satellite systems, and space exploration products.
The purpose of this report is to evaluate the stock price of Wal-Mart Stores Inc. (which ticker symbol in NYSE is WMT) by fundamental analysis. According to this analysis, I recommend that Wal-Mart is worth to invest in the long term because of the potential growth of market shares and revenue. Besides, based on P/E method and Gordon model, WMT price is undervalued; therefore, if investors buy the stock, they will get benefit not only in capital gain but also in dividend cash inflow.
1. Decompose IBM’s ROE (by quarter) and discuss the factors (and trends) that contribute to
Overall, “Boeing, Boeing” was an interesting and entertaining play. I would recommend it to everyone. However, it may be sensitive towards viewers of a young age. It does have sexual gestures and some foul language. Yet, the play would still be an enjoyable one to see, especially at the New Theatre Restaurant. The New Theatre Restaurant is such an amazingly beautiful restaurant. It had unique sculptures and other artwork spread out in each part of the building. The restaurant was a buffet and usually based their meal choices according to the kind of show they have. We had food from all the different countries; German, Spain, French, and American foods. I tried every single food selection that served and though there were a few foods I enjoyed
Looking at the brief history of Boeing, the company was first founded in Puget Sound, Washington in 1916 by William Edward Boeing.
Rate of Return on equity measures a corporation 's profitability by revealing how much profit a company generates with the money shareholders have invested. It indicates how efficiently the business uses its investment funds. For Tesco, Rate of Return on Shareholders’ Fund has increased from 13.85% in 2004 to 14.91% in 2009. This shows an improvement of 1.06% in five years period. When one examines the Sainsbury’s Rate of Return on Shareholders’ Fund, there is an increase from 7.76% to 8.36%. There is a 0.6% growth in the Rate of Return on Shareholders’ Fund. In comparison with Tesco, Sainsbury’s Rate of Return on Shareholders’ Fund is lower. Shareholders earned 13.85% from their investment (measured in book value
The company’s debt ratios are 54.5% in 1988, 58.69% in 1989, 62.7% in 1990, and 67.37% in 1991. What this means is that the company is increasing its financial risk by taking on more leverage. The company has been taking an extensive amount of purchasing over the past couple of years, which could be the reason as to why net income has not grown much beyond several thousands of dollars. One could argue that the company is trying to expand its inventory to help accumulate future sales. But another problem is that the company’s
However in 1985, Home Depot’s 9.7% ROE was much lower than Hechinger’s 15.8%. The main factor for this big drop was the ROE component, Ratio of Profit before Taxes to Sales. Home Depot’s 1.66% profit before taxes to sales trailed the 7.8% earned by Hechinger. It suggests that Home Depot had expense control issues. However depending on Hechinger’s growth strategy in 1985, Home Depot may have had a lower profit ratio due to its expansion strategy, and therefore the expense ratio is incomparable if Hechinger was not employing a significant growth strategy.
Also, according to its leverage ratios, the company’s debts are not only very high, but are also increasing. Its decreasing TIE ratio indicates that its capability to pay interests is decreasing. The company’s efficiency ratios indicate that despite the fact that its fixed assets are increasingly being utilized to generate sales during the years 1990-1991 as indicated by its increasing fixed asset turnover ratio, the decreasing total assets turnover indicate that overall the company’s total assets are not efficiently being put to use. Thus, as a whole its asset management is becoming less efficient. Last but not the least, based on its profitability ratios, the company’s ability to make profit is decreasing.
The stock that I have analyzed is Apple (AAPPL), which it falls under the technology sector and trades under the NASDAQ. This sector holds the biggest companies around the world. A lot of these companies are well known such as: Amazon, Google, LinkedIn, and etc. The technology sector is an undeniably investment opportunity for every investor around the world. Lets face it technology keeps improving and we have only seen the beginning of it. These companies, such as Apple, are associated with constant innovation and invention. Our modern economy relies upon the technology sector to improve quality, productivity, and profitability.
In this paper, an analysis of Amazon’s financial position for the year ending 2015 has been conducted. Amazon’s Pro Forma financial statements for the 2016 and 2017 were generated so as to assess the future financial position of the company. When you look at the breakdown of the analysis of financial ratios, the Return on Equity (ROE) using the DuPont method of analysis and the
Boeing Company has been and is still at the forefront of the aviation industry. The late 1990s were a time of trial and transition where the company encountered and overcame a number of
From 2002 to 2007 the bank had an 83% annual growth rate, but those increased profits did not come from productive assets, but simply just a result of increased leverage as seen when comparing Deutsche Bank’s ROA v. ROE. The bank consistently had an exponentially high ROE when the economy was doing well and led to a significant loss when the economy was in a recession in 2008. ROA stayed below .5% and above -.18% during those 10 years even when ROE reached a high of 26.72% and a low of -12.91%. ROA did not rise the way ROE did because increased debt has the potential to lower revenues as more money is spent servicing that enormous debt and if net income falls due to increased expense ROA declines but ROE can still rise as it does not effect shareholder equity. The leverage did allow for large financial gains but did cause
The Boeing Corporation is one of the largest manufacturers in the world. Rivaled only by European giant Airbus in the aerospace industry, Boeing is a leader in research, design and manufacture of commercial jet airliners, for commercial, industrial and military customers. Despite enjoying immense success in its market and dominating an industry that solely recognizes engineering excellence, it is crucial for Boeing to ensure continued growth through consistent strategy formulation and execution to avoid falling behind in market share to close and coming rivals.
TRS is believed to be a useful tool for measuring the performance of management and corporation. A traditional TRS is a combination of a percent change in earning and the price-to-equity ratio (P/E) plus with a sum of dividend(s) of a given period. However, there are some drawbacks using this traditional TRS to measure the long-term performance. One reason is that it does not clarify whether the change in earning was from which type of the three growth methods. Second, it does not take an effect of future dividend which might be less available in the future into consideration. The final problem is that this traditional approach neglects the debt-to-equity ratio effects and risks. Therefore, an enhanced TRS is suggested to executives for a clearer in-depth analysis by decomposes TRS into four elements including: TRS from performance, zero growth return, change in shareholders’ expectations, and financial leverage or other items.