Should You Buy Boeing Stock After Its Recent Rally?

Boeing stock has impressed investors lately, surging 12% year-to-date and 46% over the past twelve months. The aerospace giant reported its highest annual commercial jet deliveries since 2018, maintains a robust order backlog, and management is projecting positive cash flow for 2026. These are undeniably encouraging developments for a company that’s faced significant operational challenges in recent years.

But here’s the critical question: Does strong recent performance make BA stock a compelling buy at current levels? We don’t think so. But before we dive into the details, if you seek an upside with less volatility than holding an individual stock, consider the High Quality Portfolio. It has comfortably outperformed its benchmark—a combination of the S&P 500, Russell 2000, and S&P MidCap indexes—and has achieved returns exceeding 105% since its inception. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics. Separately, see – What’s The Upside Potential For Bitmine Immersion Technologies?

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What Does the Valuation Tell Us?

At first glance, Boeing’s valuation appears reasonable. With a price-to-sales ratio of 2.3 compared to 3.3 for the S&P 500, you might think the stock offers value. After all, you’re paying less per dollar of sales than the broader market average.

However, valuation ratios only tell part of the story. The real question is whether Boeing’s operational performance and financial condition justify even this seemingly modest multiple.

Is Boeing’s Revenue Growth Impressive?

Absolutely. Boeing’s top-line momentum has been good. The company has grown revenues at a 10.1% average annual rate over the past three years, nearly double the S&P 500’s 5.6% growth. More recently, revenues expanded 10.2% over the last twelve months to $81 billion, and quarterly revenues jumped an impressive 30.4% year-over-year to $23 billion.

This growth trajectory reflects the recovery in commercial aviation demand and Boeing’s success in ramping up aircraft deliveries after years of production challenges. The strong order backlog suggests this revenue momentum could continue.

But What About Profitability?

Here’s where the picture becomes considerably less attractive. While Boeing is generating strong revenue growth, it’s hemorrhaging money on the bottom line.

The company posted an operating loss of $8.4 billion over the last four quarters, translating to a deeply negative operating margin of -10.4%. Compare this to the S&P 500’s healthy 18.8% operating margin, and the gap is staggering. Boeing also generated a negative operating cash flow of $3.7 billion and a net loss of $9.8 billion during this period.

These aren’t just weak numbers—they’re alarmingly poor for a company with an $190 billion market capitalization. Boeing is currently valued as if it’s a profitable, cash-generating enterprise when the reality is quite different.

Can Boeing Weather Financial Stress?

Despite the profitability challenges, Boeing’s balance sheet shows some resilience. The company carries $53 billion in debt against its $190 billion market cap, resulting in a debt-to-equity ratio of 28.8%. While higher than the S&P 500’s 20.1%, this remains manageable.

More encouragingly, Boeing holds $23 billion in cash and equivalents, representing 15.3% of total assets—more than double the S&P 500 average of 7.2%. This cash cushion provides breathing room as the company works toward profitability.

How Has BA Stock Performed During Market Downturns?

Boeing’s downturn resilience is perhaps its weakest characteristic. The stock has consistently underperformed during market stress periods, falling far harder than the broader market and taking much longer to recover.

During the 2022 inflation shock, BA stock plummeted 57% from its March 2021 peak while the S&P 500 declined 25.4%. The stock still hasn’t recovered to that high, currently trading around $245 compared to its previous peak of $269.

The pattern was even more severe during the COVID-19 pandemic, when BA crashed 72.7% compared to a 33.9% decline for the S&P 500. It has yet to recover to its pre-pandemic levels. Even during the 2008 financial crisis, Boeing fell 72.6% and took six years to fully recover. See – Would You Still Hold Boeing Stock If It Fell 30%? – for more details.

What does this tell us? BA stock amplifies market volatility significantly. If you’re worried about a potential downturn, Boeing is likely to magnify your losses rather than provide stability.

What’s the Bottom Line?

Boeing presents a mixed investment picture. The company shows good revenue growth and maintains a strong balance sheet with adequate cash reserves. However, it suffers from very weak profitability, deeply negative margins, and very weak downturn resilience. Overall, this creates a moderate investment profile.

The stock’s recent 46% rally has largely priced in the positive delivery momentum and improving operational trends. At current valuations, even with the relatively modest P/S ratio, there appears to be limited upside potential. The market is already giving Boeing credit for its recovery trajectory.

Should You Wait for Better Entry Points?

We believe investors would be better served by waiting for clearer signs of financial improvement before buying BA stock. Specifically, watch for positive operating cash flow generation and a path to sustained profitability. While management is guiding for positive cash flow in 2026, seeing actual results would significantly reduce investment risk.

The recent rally has rewarded investors who bought during Boeing’s troubles. But for new money today, patience may be the better strategy. Let the company demonstrate it can convert strong deliveries into actual profits and cash flow before committing capital. The stock’s poor downturn performance also suggests you’ll likely have opportunities to buy at more attractive prices if market conditions deteriorate.

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