Shares of The Boeing Company BA rose 0.9% over the past six months, outperforming the Zacks aerospace-defense industry’s decline of 10.6% as well as the broader Zacks Aerospace sector’s fall of 6.1%.

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Over the past six months, a more stellar performance has been delivered by other industry players like Embraer ERJ, Airbus Group EADSY and RTX Corp. RTX, whose shares have risen 44%, 10.3% and 6.7%, respectively.  

Investors interested in aerospace stocks may prefer other industry members over Boeing, considering that this jet giant’s performance at the bourses is not as remarkable as its peers. However, one must not make such a significant decision like investing in a stock by just considering its share price performance over a span of six months. Instead, a prudent investor should thoroughly analyze the company’s growth prospects, financial stability as well as risks (if any) to investing in the same. This way they can make a more informed decision. 

Boeing’s Growth Prospects

The steadily rising demand for air travel and the replacement of aging fleets are expected to drive the need for new jets and aftermarket services, serving as key growth drivers for Boeing. Notably, the company’s new aircraft, offering 25% to 40% improved fuel efficiency and reduced emissions compared to older models, positions it well to capitalize on this trend. 

To this end, Boeing projects a $4.4 trillion market opportunity in commercial aviation support and services over the next two decades. Considering this, BA’s jet service business, with a robust backlog of $21.40 billion (as of Dec. 31, 2024), is poised for significant long-term growth.

The outlook for the aerospace giant’s defense business also remains optimistic. In the fourth quarter of 2024, its defense unit secured key contract awards worth $8 billion, resulting in a solid backlog of $64.02 billion for the segment as of Dec. 31, 2024. 

Such solid backlog counts boost revenue growth prospects for Boeing and thereby bolster its bottom-line performance. 

In line with this, the consensus estimate for BA’s long-term (three-to-five years) earnings growth rate is pegged at 17.4%, higher than the industry’s 11.4%. 

Let’s take a sneak peek at the company’s 2025 estimates to have an idea about its near-term growth prospects.

BA Stock’s 2025 Estimates

Boeing’s estimate for first-quarter 2025 sales suggests an improvement of 17.3% from the year-ago quarter’s reported figure, while that for full-year 2025 sales indicates a rally of 25.6%. A similar improvement trend can be observed from its 2025 earnings estimates as well. 

However, the Zacks Consensus Estimate for BA’s first-quarter and full-year 2025 earnings per share has moved down 112.7% and 103.2%, respectively, over the past 60 days. This indicates analysts’ declining confidence in the stock’s earnings capabilities.

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BA Stock’s Financial Stability

Boeing’s cash and cash equivalents (along with short-term and other investments) at the end of 2024 totaled $26.28 billion. Its long-term debt was $52.59 billion, which came in quite higher than the cash balance. On the other hand, the company’s current debt, as of Dec. 31, 2024, totaled $1.28 billion, quite lower than the cash balance. Thus, we may safely conclude that the jet giant holds a strong solvency position, at least in the near term.

Risks to Consider Before Choosing Boeing

While Boeing offers strong growth prospects, it also faces significant challenges that could affect its operational performance. Investors should carefully consider this before investing in the stock. A notable concern is the company’s 737 Max jet program, which has been a major growth inhibitor in recent years and may continue to affect BA’s growth in the near term. 

Despite resuming deliveries and receiving new orders for the aircraft, the Alaska Airlines incident and Boeing’s subsequent measures, including slowing production to address manufacturing quality control issues, might pose a substantial challenge to the growth of its commercial airplane segment in the upcoming quarters.

In addition, industry-specific challenges, like a shortage of skilled labor, continue to threaten Boeing, especially its commercial airplane division. Moreover, due to persistent supply-chain challenges, aircraft manufacturers and aerospace parts suppliers are struggling to keep up with the soaring demand, thereby limiting the potential for timely delivery of finished aircraft.

BA Stock’s Dismal ROIC

The stock’s trailing 12-month return on invested capital (ROIC) not only lags the industry’s return but also reflects a negative figure. This indicates that the company's investments are not generating sufficient returns to cover its costs, which might be a cause of concern for its investors.

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What Should an Investor Do?

To conclude, investors interested in Boeing should wait for a better entry point, considering the stock’s poor ROIC, downward movement in earnings estimates and persistent industry challenges. BA currently has a VGM Score of F, which is also not a very favorable indicator of strong performance. 

However, those who already own this Zacks Rank #3 (Hold) stock may continue to do so, considering its solid sales growth potential in 2025 and the fact that it is performing better at the bourses compared to both its sector and industry.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 

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The Boeing Company (BA) : Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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