Boeing Gains 11% in a Year: Is This the Right Time to Buy the Stock?

Shares of The Boeing Company BA surged a solid 10.8% over the past year. However, the aerospace giant lagged the S&P 500’s return of 11.9%. The stock has also underperformed the Zacks aerospace-defense industry’s rise of 21.7% and the broader Zacks Aerospace sector’s growth of 21.3% in the said time frame.Image Source: Zacks Investment ResearchShares of other aerospace bigwigs like Embraer ERJ and Airbus Group EADSY have also risen considerably over the past year and outperformed Boeing. Notably, shares of Embraer and Airbus have gained 59.5% and 10.5%, respectively.Tailwinds Driving Boeing StockBoeing has been making notable strides in the stock market lately, supported by multiple contract wins, solid financial position and improved revenue performance in its commercial airplane business, which has been struggling in recent years. This, in turn, must have boosted investors’ confidence in BA and thereby led to its aforementioned share price hike.Evidently, Boeing’s revenues from the commercial aerospace segment surged 75% year over year to $8.15 billion in the first quarter of 2025, driven by higher jet deliveries. Meanwhile, the company’s defense unit won key contract awards worth $4 billion in the first quarter, which resulted in a solid backlog amount of $61.57 billion for this segment as of March 31, 2025. Such solid contract wins and subsequent backlog count are indicative of the solid demand that Boeing’s products enjoy in the defense market. Moreover, Boeing’s cash and cash equivalents (along with short-term and other investments) at the end of the first quarter of 2025 totaled $23.67 billion. Its long-term debt was $45.69 billion, while current debt, as of March 31, 2025, was $7.93 billion. After a comparative analysis of the aforementioned figure, one may safely conclude that the American jet giant holds a strong solvency position, at least in the near term.Can BA Stock Continue With its Rally?Rising air travel and an aging global fleet are driving demand for new jets and aftermarket services, which, in turn, bodes well for the Boeing Global Services (“BGS”) unit. To this end, Boeing forecasts a $4.4-trillion market opportunity for commercial aviation support and services during 2024-2043. With a strong $22.04 billion backlog, as of March 31, 2025, the BGS unit is thus well-positioned for sustained long-term expansion, backed by the aforementioned market growth opportunity.The rapidly growing commercial air travel also bodes well for other aerospace giants like Embraer and Airbus, which actively serve the commercial aftermarket services market through their Embraer Services & Support and Airbus Services units, respectively. Boeing’s long-term defense outlook also remains strong, supported by rising U.S. defense spending and major program involvement, such as the F-47 Next Generation Air Dominance platform. Notably, in May 2025, the U.S. President proposed an increase of 13% in the nation’s defense spending (to $1.01 trillion) for fiscal 2026. This should boost growth potential for Boeing’s defense offerings in the years ahead.In line with this, the Zacks Consensus Estimate for BA’s long-term (three-to-five years) earnings growth rate is pegged at 18.1%, higher than the industry’s 11.8%. Now, let’s take a sneak peek at the company’s near-term estimates to understand whether the figures mirror similar growth prospects.BA Stock’s EstimatesBoeing’s estimate for second-quarter 2025 sales suggests an improvement of 18.1% from the year-ago quarter’s reported figure, while that for full-year 2025 sales indicates a rally of 25.6%. A similar improvement trend can be observed from its 2026 sales estimates. Its quarterly as well as yearly earnings estimates also reflect similar robust performance on a year-over-year basis.  Additionally, an upward revision has been observed in the company’s 2025 and 2026 earnings estimates over the past 60 days. This indicates that investors are gaining confidence in the stock’s earnings-generating capabilities.Image Source: Zacks Investment ResearchImage Source: Zacks Investment ResearchRisks to Consider Before Choosing BoeingWhile Boeing presents strong growth potential, it also faces key challenges that investors should weigh carefully. Despite a recovery in air travel driving demand for commercial aircraft, persistent global supply-chain disruptions, especially shortages of critical parts, continue to hinder and are expected to affect the aviation industry in 2025. This remains a major risk for jet manufacturers like Boeing, Airbus and Embraer. Additionally, newly imposed U.S. tariffs on imported goods may worsen existing disruptions, causing further delays in sourcing components essential for Boeing’s jet production. These delays could raise manufacturing costs and strain production timelines, making it difficult for Boeing to meet delivery commitments. Such operational setbacks may weigh on its financial performance and weaken investor sentiment.BA Stock’s Poor ROICThe image below shows that BA stock’s trailing 12-month return on invested capital (ROIC) not only lags the peer group’s average return but also reflects a negative figure. This suggests that the company's investments are not yielding sufficient returns to cover its expenses.Image Source: Zacks Investment ResearchHowever, the ROIC of its peers, Embraer and Airbus, is currently better than that of Boeing. While the ROIC for ERJ is currently 14.24, the same for EADSY is 4.71.BA Trading at a PremiumIn terms of valuation, Boeing’s forward 12-month price-to-sales (P/S) is 1.78X, a premium to its peer group’s average of 1.75X. This suggests that investors will be paying a higher price than the company's expected sales growth compared to that of its peer group. The stock’s forward 12-month P/S also seems stretched when compared to its five-year median value, 1.41.Image Source: Zacks Investment ResearchShould You Invest in BA Stock Now?To conclude, investors interested in Boeing should wait for a better entry point, considering the stock’s poor ROIC and premium valuation. BA currently has a VGM Score of F, which is also not a very favorable indicator of strong performance. However, those who already own this Zacks Rank #3 (Hold) stock may continue to do so, considering its recent share price hike, solid sales and earnings growth potential as well as upward revision in annual earnings estimates.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Boeing Company (BA): Free Stock Analysis Report Embraer-Empresa Brasileira de Aeronautica (ERJ): Free Stock Analysis Report Airbus Group (EADSY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks