At a current price of $72, BA trades at roughly 17x the high end of the 2010 guidance of around $3.80 to $4 making the stock on the expensive side. Analysts place the 5 year growth rate around 10% so BA clearly trades expensive compared to growth potential as well. While the airplane industry is on the verge of a multi year cycle, BA management hasn't made an aggressive move to push more capital to shareholders especially in the form of a targeted buyback with the stock trading in the low $60s for a good portion of Q3. All adding up to a company with great prospect, but a stock that might be over valued now.
Most notably BA had $10B in cash/marketable securities and chose to not utilize that money to enhance shareholder value.
- Third-quarter earnings per share of $1.12 reported on operating margin of 8.2 percent and revenue of $17.0 billion
- Operating cash flow of $1.9 billion reflects strong operating performance
- Cash and marketable securities of $10.0 billion provides strong liquidity
- Backlog grew to $321 billion including $25 billion of new orders in the quarter
- 2010 earnings per share guidance increased to between $3.80 and $4.00 per share on stronger Commercial Airplanes outlook