Our Calculation Of Intrinsic Value: The Boeing Company

Each week we run a DCF (Discounted Cash Flow) model on a company from our watchlist. This week’s pick: The Boeing Company (BA) (BA).

Profile

Boeing is a global aerospace and defense manufacturer spanning commercial aircraft (737, 787, 777 programs), defense systems, space operations, and global services. Its revenue base is driven primarily by commercial aircraft deliveries, long-cycle defense contracts, and aftermarket services tied to installed fleet maintenance.

Boeing’s asset base includes large-scale production facilities, long-duration government contracts, a global service network, and one of the world’s largest commercial aircraft backlogs. However, the company is still navigating the financial aftermath of production disruptions, safety issues, supply chain constraints, and elevated leverage accumulated during prior downturns.

Recent financials reflect improving revenue but continued balance sheet repair and uneven free cash flow generation.

DCF Analysis

Inputs:

Discount Rate: 10%
Terminal Growth Rate: 2.5%
WACC: 10%

Forecasted Free Cash Flows (in billions USD)

2025: $2.0 → PV: $1.8
2026: $4.0 → PV: $3.3
2027: $6.0 → PV: $4.5
2028: $7.5 → PV: $5.1
2029: $8.5 → PV: $5.3

Total Present Value of FCFs = $20.0B

Terminal Value Calculation

Using perpetuity growth model with 2029 FCF = $8.5B:

TV = (8.5 × 1.025) ÷ (0.10 − 0.025) = $116.2B
Present Value of Terminal Value = $72.1B

Enterprise Value

Enterprise Value = $20.0B + $72.1B = $92.1B

Net Debt

Cash & Equivalents: ~$29.4B
Total Debt: ~$54.4B
Net Debt ≈ $25.0B

Equity Value & Per-Share Value

Equity Value = $92.1B − $25.0B = $67.1B
Ordinary Shares Outstanding: ~785M
Intrinsic Value per Share ≈ $85

Conclusion

DCF Value: ~$85
Current Price: ~$230
Margin of Safety: ~–63%

Boeing remains a strategically critical aerospace manufacturer with a massive commercial aircraft backlog and strong defense exposure. Long-cycle demand for narrowbody aircraft replacement, global air travel recovery, and recurring services revenue provide structural tailwinds over the long term.

However, the company continues to operate with elevated leverage and inconsistent free cash flow, making valuation highly sensitive to execution on production ramp-ups and margin recovery. Under conservative DCF assumptions reflecting gradual normalization, BA currently trades significantly above intrinsic value. The market appears to be pricing in a full recovery scenario and sustained production stability.

For investors, Boeing represents a turnaround and execution story rather than a cash-flow-stable compounder. At current levels, valuation implies limited margin of safety unless operational recovery exceeds modeled expectations.