A growing demand backlog is fueling a highly optimistic narrative for The Boeing Company (NYSE:BA). The breakdown is striking, as the company is accelerating its push across all core segments. It reported $715 billion in total backlog by the end of second quarter, which included $597 billion for commercial airplanes. Boeing faces strong demand for its 767, 777X and 787 programs. Backlogs for Defense, Space & Security, and Global Services segments stood at $85 billion and $33 billion, respectively. We recently shed light on Boeing’s ability to to supply fully overhauled equipment, as it extends the Landing Gear Exchange Program to single-aisle 737 MAX platform.
Boeing ranks #2 on our list of the 5 Best Aerospace and Defense Stocks to Buy According to Hedge Funds. But which stock beat Boeing to claim the #1 spot?
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Strong Commercial Momentum
Boeing recently completed the first landing gear exchange with American Airlines, which represents a major milestone for the company as it extends its Landing Gear Exchange Program to single-aisle 737 MAX platform. This authenticates the program’s quality standard, and acknowledges the company’s capacity to supply fully overhauled equipment.
The company delivered $24.6 billion in revenue for the second quarter of fiscal 2026, compared to $22.7 billion during the corresponding period last year. Its cash flows turned positive, despite a core loss of ($0.76) per share, primarily driven by working capital gains. Boeing generated $1.4 billion in operating cash flow and $631 million in free cash flow during the quarter.
Another strategic development involves the successful launch of its last three O3b mPOWER satellites, F11, F12 and F13. With that, Boeing completed its 13-satellite constellation for operator SES. The completion represents an acknowledgment of Boeing’s software-defined architecture in orbit, resulting in a proven technical baseline for the company. See how Boeing’s 13-satellite constellation aims to back high-speed global connectivity for customers with emerging bandwidth needs.
Thin Margins, High Leverage and Capital Constraints
Despite the ongoing “turnaround” narrative, investors remain concerned about thin margins and profitability. Additional risk stems from the leverage position, with Boeing’s debt-to-equity ratio standing at around 7.5x, as of the second quarter. The company reported $45.9 billion in consolidated debt, down from $47.2 billion in the previous quarter. With $20 billion in cash and marketable instruments, total net debt stands at $25.9 billion.
For its Landing Gear Exchange Program, Boeing faces capital constraints. Scaling up inventory exchange for the 737 MAX would require deployment of significant amount of capital. In addition, underlying demand may outpace the company’s ability to build sufficient inventory, resulting in potential bottlenecks. The Defense, Space & Security unit continues struggling with fixed-price development contracts that have produced multibillion-dollar losses, remaining a drag on margins and execution. Boeing’s impressive backlog growth is further strengthening its bullish narrative.
Valuation and Debt Weigh on Recovery
Boeing is down 11.44% in 2026, reflecting on how far this aviation giant has lagged a market that has rewarded investors elsewhere. With $93.99 billion sales recorded during the last twelve months, the business appears to be heading in the right direction. However, the 2.59% trailing net profit margin is distorted by a $9.6 billion one-time gain from the sale of Boeing’s Digital Aviation Solutions business in 2025. The company still reported a net loss of $428 million in Q2 2026.. But there is still plenty of work to be done after years of losses that have eroded equity significantly. With a total debt of $48.36 billion, its debt-to-equity ratio currently stands at 790.88%, which is alarming for investors.
Valuation metrics add to the concern as they appear too demanding for an industrial company carrying a heavy debt burden and offering very thin margins. The company has a market capitalization of $158.02 billion, and the stock is currently trading at 71.92x trailing P/E ratio. The forward P/E multiple also stands at 49.51x, implying that the market has already priced in much of Boeing’s recovery.
Institutional Sentiment
Data tracked across 1,000+ hedge funds by Insider Monkey still shows significant amount of institutional interest in The Boeing Company. This is despite a drop in the number of hedge funds holding positions in the stock. As per 13F filings, hedge fund ownership declined from 99 funds in Q1 2026 to 90 funds in the following quarter. Short interest remains slightly above 2%, suggesting very nominal bets against the stock.
BlackRock is the largest institutional stakeholder in the company, as per Yahoo Finance database, with 61.04 million shares. This translates into 7.72% ownership in the stock. Other notable stakeholders include FMR and Vanguard Capital Management with 7.46% and 6.51% ownerships respectively.
Conclusion
Boeing’s massive demand backlog and cash flow generation back its turnaround narrative, strengthened by recent milestones such as the 737 MAX landing gear program and satellite constellation completion. Leverage concerns, thin margins, and persistent losses within Defense, Space & Security could temper investor enthusiasm. Investors should weigh strong demand signals against execution risks and balance-sheet pressures ahead.
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