Stock Analysis on Net
Stock Analysis on Net

Boeing Co. (NYSE:BA)

Present Value of Free Cash Flow to the Firm (FCFF)

Microsoft Excel

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to the firm (FCFF) is generally described as cash flows after direct costs and before any payments to capital suppliers.

Intrinsic Stock Value (Valuation Summary)

Boeing Co., free cash flow to the firm (FCFF) forecast

US$ in millions, except per share data

Microsoft Excel
Year Value FCFFt or Terminal value (TVt) Calculation Present value at 13.52%
01 FCFF0 6,442
1 FCFF1 6,442 = 6,442 × (1 + 0.00%) 5,675
2 FCFF2 6,442 = 6,442 × (1 + 0.00%) 4,999
3 FCFF3 6,442 = 6,442 × (1 + 0.00%) 4,403
4 FCFF4 6,442 = 6,442 × (1 + 0.00%) 3,878
5 FCFF5 6,442 = 6,442 × (1 + 0.00%) 3,416
5 Terminal value (TV5) 47,631 = 6,442 × (1 + 0.00%) ÷ (13.52% – 0.00%) 25,260
Intrinsic value of Boeing Co. capital 47,631
Less: Debt, including finance lease obligations and commercial paper (fair value) 51,292
Intrinsic value of Boeing Co. common stock -3,661
 
Intrinsic value of Boeing Co. common stock (per share) $-6.00
Current share price $169.55

Based on: 10-K (reporting date: 2023-12-31).

1 See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Weighted Average Cost of Capital (WACC)

Boeing Co., cost of capital

Microsoft Excel
Value1 Weight Required rate of return2 Calculation
Equity (fair value) 103,448 0.67 18.59%
Debt, including finance lease obligations and commercial paper (fair value) 51,292 0.33 3.31% = 4.67% × (1 – 29.20%)

Based on: 10-K (reporting date: 2023-12-31).

1 US$ in millions

   Equity (fair value) = No. shares of common stock outstanding × Current share price
= 610,135,205 × $169.55
= $103,448,424,007.75

   Debt, including finance lease obligations and commercial paper (fair value). See details »

2 Required rate of return on equity is estimated by using CAPM. See details »

   Required rate of return on debt. See details »

   Required rate of return on debt is after tax.

   Estimated (average) effective income tax rate
= (21.00% + 21.00% + 14.70% + 17.50% + 71.80%) ÷ 5
= 29.20%

WACC = 13.52%

FCFF Growth Rate (g)

FCFF growth rate (g) implied by PRAT model

Boeing Co., PRAT model

Microsoft Excel
Average Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in millions)
Interest and debt expense 2,459 2,533 2,682 2,156 722
Net loss attributable to Boeing Shareholders (2,222) (4,935) (4,202) (11,873) (636)
 
Effective income tax rate (EITR)1 21.00% 21.00% 14.70% 17.50% 71.80%
 
Interest and debt expense, after tax2 1,943 2,001 2,288 1,779 204
Add: Cash dividends declared — — — — 4,628
Interest expense (after tax) and dividends 1,943 2,001 2,288 1,779 4,832
 
EBIT(1 – EITR)3 (279) (2,934) (1,914) (10,094) (432)
 
Short-term debt and current portion of long-term debt 5,204 5,190 1,296 1,693 7,340
Long-term debt, excluding current portion 47,103 51,811 56,806 61,890 19,962
Shareholders’ deficit (17,233) (15,883) (14,999) (18,316) (8,617)
Total capital 35,074 41,118 43,103 45,267 18,685
Financial Ratios
Retention rate (RR)4 — — — — —
Return on invested capital (ROIC)5 -0.80% -7.14% -4.44% -22.30% -2.31%
Averages
RR —
ROIC -7.40%
 
FCFF growth rate (g)6 0.00%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 See details »

2023 Calculations

2 Interest and debt expense, after tax = Interest and debt expense × (1 – EITR)
= 2,459 × (1 – 21.00%)
= 1,943

3 EBIT(1 – EITR) = Net loss attributable to Boeing Shareholders + Interest and debt expense, after tax
= -2,222 + 1,943
= -279

4 RR = [EBIT(1 – EITR) – Interest expense (after tax) and dividends] ÷ EBIT(1 – EITR)
= [-279 – 1,943] ÷ -279
= —

5 ROIC = 100 × EBIT(1 – EITR) ÷ Total capital
= 100 × -279 ÷ 35,074
= -0.80%

6 g = RR × ROIC
= — × -7.40%
= 0.00%

FCFF growth rate (g) implied by single-stage model

g = 100 × (Total capital, fair value0 × WACC – FCFF0) ÷ (Total capital, fair value0 + FCFF0)
= 100 × (154,740 × 13.52% – 6,442) ÷ (154,740 + 6,442)
= 0.00%

where:

Total capital, fair value0 = current fair value of Boeing Co. debt and equity (US$ in millions)
FCFF0 = the last year Boeing Co. free cash flow to the firm (US$ in millions)
WACC = weighted average cost of Boeing Co. capital

FCFF growth rate (g) forecast

Boeing Co., H-model

Microsoft Excel
Year Value gt
1 g1 0.00%
2 g2 0.00%
3 g3 0.00%
4 g4 0.00%
5 and thereafter g5 0.00%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= 0.00% + (0.00% – 0.00%) × (2 – 1) ÷ (5 – 1)
= 0.00%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 0.00% + (0.00% – 0.00%) × (3 – 1) ÷ (5 – 1)
= 0.00%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 0.00% + (0.00% – 0.00%) × (4 – 1) ÷ (5 – 1)
= 0.00%