Boeing's Valuation Discount May Be Mispriced

Boeing, an aerospace giant, may be due for a reevaluation by investors. While GE Aerospace is a fine and worthy stock with a long-term stream of recurring earnings and cash flow from servicing its commercial aerospace engines, Boeing's challenges are already reflected in its valuation.

The company faces internal execution issues and the risk of a cyclical slowdown in its end markets, but it has made progress in addressing these concerns. Its backlog currently stands at a record $715 billion, with Boeing Commercial Airplanes' (BCA) backlog at a record $597 billion, representing more than 6,200 planes.

The market's pessimism about Boeing is evident in its valuation discount relative to peers. However, the company is slowly turning around its issues, and management expects its defense arm, Boeing Defense, Space & Security (BDS), to reach an operating margin of 2.5% for 2026.

With a valuation discount already reflected in its price, Boeing's stock may be worth reconsidering as a value play in the sector.