Stock Analysis on Net
Stock Analysis on Net
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Boeing Co. (NYSE:BA)

Dividend Discount Model (DDM)

Intermediate level

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Dividends are the cleanest and most straightforward measure of cash flow because these are clearly cash flows that go directly to the investor.


Intrinsic Stock Value (Valuation Summary)

Boeing Co., dividends per share (DPS) forecast

US$

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Year Value DPSt or Terminal value (TVt) Calculation Present value at 17.48%
0 DPS01 2.06
1 DPS1 3.28 = 2.06 × (1 + 59.58%) 2.79
2 DPS2 4.88 = 3.28 × (1 + 48.80%) 3.54
3 DPS3 6.74 = 4.88 × (1 + 38.02%) 4.15
4 DPS4 8.57 = 6.74 × (1 + 27.24%) 4.50
5 DPS5 9.98 = 8.57 × (1 + 16.46%) 4.46
5 Terminal value (TV5) 1,136.76 = 9.98 × (1 + 16.46%) ÷ (17.48%16.46%) 507.96
Intrinsic value of Boeing Co.’s common stock (per share) $527.40
Current share price $234.06

Based on: 10-K (filing date: 2021-02-01).

1 DPS0 = Sum of the last year dividends per share of Boeing Co.’s common stock. 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.


Required Rate of Return (r)

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Assumptions
Rate of return on LT Treasury Composite1 RF 2.15%
Expected rate of return on market portfolio2 E(RM) 11.72%
Systematic risk of Boeing Co.’s common stock βBA 1.60
 
Required rate of return on Boeing Co.’s common stock3 rBA 17.48%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 rBA = RF + βBA [E(RM) – RF]
= 2.15% + 1.60 [11.72%2.15%]
= 17.48%


Dividend Growth Rate (g)

Dividend growth rate (g) implied by PRAT model

Boeing Co., PRAT model

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Average Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Selected Financial Data (US$ in millions)
Cash dividends declared —  4,628  4,101  3,556  2,902 
Net earnings (loss) attributable to Boeing Shareholders (11,873) (636) 10,460  8,197  4,895 
Revenues 58,158  76,559  101,127  93,392  94,571 
Total assets 152,136  133,625  117,359  92,333  89,997 
Shareholders’ equity (deficit) (18,316) (8,617) 339  355  817 
Financial Ratios
Retention rate1 0.61 0.57 0.41
Profit margin2 -20.42% -0.83% 10.34% 8.78% 5.18%
Asset turnover3 0.38 0.57 0.86 1.01 1.05
Financial leverage4 346.19 260.09 110.16
Averages
Retention rate 0.53
Profit margin 0.61%
Asset turnover 0.78
Financial leverage 238.81
 
Dividend growth rate (g)5 59.58%

Based on: 10-K (filing date: 2021-02-01), 10-K (filing date: 2020-01-31), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-12), 10-K (filing date: 2017-02-08).

2020 Calculations

1 Retention rate = (Net earnings (loss) attributable to Boeing Shareholders – Cash dividends declared) ÷ Net earnings (loss) attributable to Boeing Shareholders
= (-11,8730) ÷ -11,873
=

2 Profit margin = 100 × Net earnings (loss) attributable to Boeing Shareholders ÷ Revenues
= 100 × -11,873 ÷ 58,158
= -20.42%

3 Asset turnover = Revenues ÷ Total assets
= 58,158 ÷ 152,136
= 0.38

4 Financial leverage = Total assets ÷ Shareholders’ equity (deficit)
= 152,136 ÷ -18,316
=

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= 0.53 × 0.61% × 0.78 × 238.81
= 59.58%


Dividend growth rate (g) implied by Gordon growth model

g = 100 × (P0 × rD0) ÷ (P0 + D0)
= 100 × ($234.06 × 17.48%$2.06) ÷ ($234.06 + $2.06)
= 16.46%

where:
P0 = current price of share of Boeing Co.’s common stock
D0 = the last year dividends per share of Boeing Co.’s common stock
r = required rate of return on Boeing Co.’s common stock


Dividend growth rate (g) forecast

Boeing Co., H-model

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Year Value gt
1 g1 59.58%
2 g2 48.80%
3 g3 38.02%
4 g4 27.24%
5 and thereafter g5 16.46%

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

Calculations

g2 = g1 + (g5g1) × (2 – 1) ÷ (5 – 1)
= 59.58% + (16.46%59.58%) × (2 – 1) ÷ (5 – 1)
= 48.80%

g3 = g1 + (g5g1) × (3 – 1) ÷ (5 – 1)
= 59.58% + (16.46%59.58%) × (3 – 1) ÷ (5 – 1)
= 38.02%

g4 = g1 + (g5g1) × (4 – 1) ÷ (5 – 1)
= 59.58% + (16.46%59.58%) × (4 – 1) ÷ (5 – 1)
= 27.24%