Is The Boeing Company (BA) Destined for Greatness?

Investors love stocks that consistently beat the Street without getting ahead of their fundamentals and risking a meltdown. The best stocks offer sustainable market-beating gains, with robust and improving financial metrics that support strong price growth. Does The Boeing Company (NYSE:BA) fit the bill? Let’s take a look at what its recent results tell us about its potential for future gains.

What we’re looking for
The graphs you’re about to see tell The Boeing Company (NYSE:BA)’s story, and we’ll be grading the quality of that story in several ways:

Growth: are profits, margins, and free cash flow all increasing?

Valuation: is share price growing in line with earnings per share?

Opportunities: is return on equity increasing while debt to equity declines?

Dividends: are dividends consistently growing in a sustainable way?

What the numbers tell you
Now, let’s take a look at The Boeing Company (NYSE:BA)’s key statistics:

BA Total Return Price data by YCharts

Passing Criteria	3-Year* Change	Grade
Revenue growth > 30%	21.2%	Fail
Improving profit margin	175.9%	Pass
Free cash flow growth > Net income growth	28.4% vs. 234.4%	Fail
Improving EPS	222.2%	Pass
Stock growth (+ 15%) < EPS growth	53% vs 222.2%	Pass

Source: YCharts.
*Period begins at end of Q1 2010.

BA Return on Equity data by YCharts

Passing Criteria	3-Year* Change	Grade
Improving return on equity	(62.5%)	Fail
Declining debt to equity	(72.1%)	Pass
Dividend growth > 25%	15.5%	Fail
Free cash flow payout ratio < 50%	25.3%	Pass

Source: YCharts.
*Period begins at end of Q1 2010.

How we got here and where we’re going
The Boeing Company (NYSE:BA), one of the largest aircraft manufacturers in the world, doesn’t quite come through with flying colors, as it’s mustered only five out of nine possible passing grades. It’s worth pointing out that despite Boeing’s net income growth far outpacing free cash flow during our tracking period, the raw numbers show that Boeing’s most recent trailing 12-month free cash flow is actually higher than its net income. Despite its weaknesses, The Boeing Company (NYSE:BA)’s shares have enjoyed significant growth over the past two years, and it has a very good chance to improve on its score next time around once the big jump seen in 2010 ages out of our tracking period. But does that mean Boeing will keep outperforming in the future? Let’s dig a little deeper.