Shares of The Boeing Co. (BA) are down more than 2% Wednesday morning, adding to the losses the stock has faced over the past year. The catalyst today is a potential downgrade for the company’s bonds.

S&P Global Ratings sees concerns with the business from a cash perspective, and the mass worker strike currently taking place is only going to exacerbate that issue. 

The rating system assesses a company’s ability to repay debt. There are a few different ratings a corporation can be assigned within the S&P system. AAA, AA, A, and BBB are all considered “investment grade,” ranging from best to good and even just mediocre.

But, there are also “non-investment grade,” or junk bonds. These range from BB, B, CCC, CC, and C, and are considered fairly speculative. That’s where the concern comes in for Boeing. 

It’s at risk of being downgraded to junk status, which has a few different implications. Beyond reputational erosion, it will be harder for the company to acquire debt at an affordable rate if it is rated lower.

One specific issue S&P is seeing is that if the strike doesn’t end soon for Boeing, it will be unable to fulfill its goal of producing 38 Boeing 737 Max planes a month before the end of the year. 

This is the company’s best-selling jet, and it could really use its breadwinner right now. The company is burning through cash at a concerning pace and will have to pay back $4 billion in debt by April 2025.

S&P isn’t the first agency to adjust its outlook on Boeing. Just last month Moody’s also downgraded the company. 

Amidst a sea of other challenges – like whistleblower allegations, safety concerns, and lawsuits – this is just another reason investors may consider selling BA. The stock has plummeted 41% through 2024 thus far.

We’ve taken a closer look at this situation in the VectorVest stock software and found 3 things you may be interested in seeing if you’re currently invested in BA or looking for an opportunity to trade this stock. 

BA Has Poor Upside Potential, Safety, and Timing, But It's Not Quite Time to Sell This Stock

VectorVest is a proprietary stock rating system designed to streamline your investment strategy, helping you win more trades with less work and stress. It does this by distilling complex technical and fundamental data into just 3 ratings, simplifying your approach to analysis.

These ratings are relative value (RV), relative safety (RS), and relative timing (RT). Each sits on a scale of 0.00-2.00 with 1.00 being the average. This makes interpretation quick and easy, but it gets even better.

The system issues a clear buy, sell, or hold recommendation for any given stock at any given time based on its overall VST rating. This eliminates any guesswork or emotion from your decision-making. As for BA, here’s what you need to know:

  • Poor Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (forecasted 3 years out), AAA corporate bond rates, and risk. It’s a far superior indicator than the typical comparison of price to value alone. BA has a poor RV rating of 0.56. Even after all the value it shed this year, BA is overvalued - with a current value of just $51.67/share.
  • Poor Safety: The RS rating is a risk indicator. It’s computed from an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. The RS rating of 0.75 is also poor for BA.
  • Poor Timing: The RT rating is based on the direction, dynamics, and magnitude of the stock’s price movement. It’s calculated day over day, week over week, quarter over quarter, and year over year. The RT rating of 0.66 is also poor for BA, reflecting the stock’s abysmal performance over the short and long term.

The overall VST rating of 0.67 is poor for BA, but it’s not quite time to sell this stock yet. It’s currently rated a HOLD in the VectorVest system. Take a moment to dig deeper with a free stock analysis at VectorVest and see for yourself how much simpler and more profitable investing can be!

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VectorVest advocates buying safe, undervalued stocks, rising in price. The issues keep piling up for BA, which is at risk of being downgraded once again. S&P sees concerns with its cash flow and production amidst the ongoing strike. The stock itself has poor upside potential, safety, and timing.

Before you invest, check VectorVest! Click here to ANALYZE ANY STOCK FREE and see our system in action!