The Boeing Company (NYSE:BA) jumped more than 13% in the last 5 trading days, outperforming the broader market which moved up a little more than 4%. This is interesting because Boeing is not the kind of stock that has given high capital returns in the last few years – it returned just around 15% between 2017 and 2019. So does this jump suggest a buying opportunity? Depends on what time horizon you are looking at. Because whenever Boeing stock has jumped like this in the past, more often than not, it has pulled back within a month. How do we know this? This is where our AI engine comes in.
Our engine analyzes past patterns in stock movements to predict near term behavior for a given level of movement in the recent period, and suggests just a 16% probability of The Boeing Company jumping another 10% over the next 21 trading days. However, the chances of falling -10% during the time frame are twice that at 32%. Though it is interesting to note that the equation changes once you change the time horizon. Over the next 3 months, Boeing is nearly 1.7x more likely to move up 10% than move down -10%. Our detailed dashboard highlights the chances of The Boeing Company’s stock rising or falling and should help you understand near-term return probabilities for different levels of movements.
But what do the underlying fundamentals suggest? They don’t really encourage a buy decision at this point, either. Our dashboard Big Movers: The Boeing Company Moved 13% – What Next? lays this out.
The Boeing Company’s stock price increased 13.2% last week. In comparison, the stock has increased 15% between 2017 and 2019, and has decreased -41% between 2017 and now. There wasn’t a lot of return for investors during the 2-3 years prior to the pandemic, and now the stock is down significantly. Something must not be right with the underlying financials. Let’s take a look. The Boeing Company’s revenue has decreased -18% from $94,005 Mil in 2017 to $76,559 Mil in 2019. For the last 12 months, this figure stood at $66,606 Mil, implying a further decrease of -13% over 2019 numbers. Profits tell the same story as net margins have decreased -109% from 9% in 2017 to -0.8% in 2019. For the last 12 months, this figure plummeted to -4.27%. Though, next year is likely to see a significant revenue rebound.
Taking both perspectives together, it appears that Boeing may not be a very attractive investment opportunity at this point. In the meantime, here’s a high quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk, it has outperformed the broader market year after year, consistently.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.