Boeing expects 2023 aircraft financing to reach pre-pandemic levels

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Boeing Co said on Wednesday that it expects commercial aircraft financing to reach near pre-pandemic levels in 2023, highlighting strong industry fundamentals.
The planemaker expects the industry will need $94 billion in delivery funding, slightly below $98 billion in 2019. The funding was at $69 billion last year.
Boeing, which annually reviews aircraft financing trends, said it sees increased interest from financiers and investors to aid commercial airplane deliveries.

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    <p>Cash continues to be a dominant source of funding, the company said. The industry gets financing through a variety of sources such as capital markets, bank debt, export credit, sale leaseback among others.<br />"This positive trend reaffirms that our industry's fundamentals are strong and aircraft financiers and investors are well positioned as travel continues to recover," said Rich Hammond, vice president of Customer Finance at Boeing.<br />The planemaker released its outlook amid increased signs of distress in the banking sector as shares of Credit Suisse slumped on funding concerns. Banks have already been under pressure following the recent collapse of the Silicon Valley Bank and Signature Bank.<br /><br /></p>        
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    <p>Two European aviation sources said the Credit Suisse episode was being viewed in the industry as a management and derivatives issue rather than a repeat of the liquidity crisis which rocked the sector and shut off bank loans in 2009.<br /><br />Boeing, which has played a key role in promoting the emergence of aviation finance as an asset class, issued its first forecast since deciding to absorb its financing arm Boeing Capital into its airplanes unit.<br />The $100-billion-plus sector has benefited from a flood of investment chasing high dollar-denominated returns during a decade of central bank stimulus following the 2008 financial crisis.<br />Financiers at an industry gathering in Dublin in January said there was plentiful supply of funds for aviation but at tighter conditions, given rising interest rates and a sharp focus on credit quality.<br /><br /></p>     
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    <h3>Here is What to Know Beyond Why The Boeing Company (BA) is a Trending Stock</h3>        
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Boeing (BA) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock’s performance in the near term.
Shares of this airplane builder have returned -5.1% over the past month versus the Zacks S&P 500 composite’s -5.1% change. The Zacks Aerospace – Defense industry, to which Boeing belongs, has lost 3.3% over this period. Now the key question is: Where could the stock be headed in the near term?
Although media reports or rumors about a significant change in a company’s business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.

Earnings Estimate Revisions

Zacks prioritize appraising the change in the projection of a company’s future earnings over anything else. That’s because we believe the present value of its future stream of earnings is what determines the fair value for its stock.
We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors’ interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For the current quarter, Boeing is expected to post a loss of $0.39 per share, indicating a change of +85.8% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.7% over the last 30 days.

For the current fiscal year, the consensus earnings estimate of $0.93 points to a change of +108.4% from the prior year. Over the last 30 days, this estimate has changed +0.8%.
For the next fiscal year, the consensus earnings estimate of $5.87 indicates a change of +531.5% from what Boeing is expected to report a year ago. Over the past month, the estimate has changed -2.4%.
Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock’s price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Boeing is rated Zacks Rank #3 (Hold).
The chart below shows the evolution of the company’s forward 12-month consensus EPS estimate:

While earnings growth is arguably the most superior indicator of a company’s financial health, nothing happens as such if a business isn’t able to grow its revenues. After all, it’s nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it’s important to know a company’s potential revenue growth.

In the case of Boeing, the consensus sales estimate of $17.89 billion for the current quarter points to a year-over-year change of +27.9%. The $81.35 billion and $89.84 billion estimates for the current and next fiscal years indicate changes of +22.1% and +10.4%, respectively.
Last Reported Results and Surprise History
Boeing reported revenues of $19.98 billion in the last reported quarter, representing a year-over-year change of +35.1%. EPS of -$1.75 for the same period compares with -$7.69 a year ago.
Compared to the Zacks Consensus Estimate of $19.43 billion, the reported revenues represent a surprise of +2.85%. The EPS surprise was -3600%.
The company could not beat consensus EPS estimates in any of the last four quarters. The company topped consensus revenue estimates just once over this period.
Valuation

Without considering a stock’s valuation, no investment decision can be efficient. In predicting a stock’s future price performance, it’s crucial to determine whether its current price correctly reflects the intrinsic value of the underlying business and the company’s growth prospects.
While comparing the current values of a company’s valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S) and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock’s price.

The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an An is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.
Boeing is graded C on this front, indicating that it is trading at par with its peers. Click here to see the values of some of the valuation metrics that have driven this grade.
Bottom Line
The facts discussed here and much other information on Zacks.com might help determine whether or not it’s worthwhile paying attention to the market buzz about Boeing. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.