Move Over, GE Aerospace: This Aerospace Stock Deserves Your Attention Instead
The case for buying Boeing stock is based on its absolute and relative valuation.
Overview
GE Aerospace (NYSE: GE) is a fine and worthy stock, and it deserves a premium rating for the surety of its long-term stream of recurring earnings and cash flow coming from servicing its commercial aerospace engines.
However, many of the assumptions necessary to justify its valuation also support a higher valuation for Boeing (NYSE: BA). Here's why I think investors should take a closer look at Boeing as a value play in the industry.
Details
I'm not arguing that Boeing doesn't face challenges, not least from internal execution issues and the ever-present risk of a cyclical slowdown in its end markets. I also believe that the issues it's had with the 737 MAX mean that it's almost missed the cash cycle with the aircraft, whereby the cash flow from one narrow-body fund funds the massive investment needed to develop the next one. In addition, its defense arm, Boeing Defense, Space & Security (BDS), continues to generate negative or meager profit margins as it takes charges on high-profile fixed-price development programs.
Source
Originally published at www.fool.com.