President Xi Jinping Has Promised China Will Buy 200 Boeing 737s. Here Is One More Big Reason the Stock Is a Buy in 2026.
The recent confirmation that China would buy 200 737 model jets from Boeing (NYSE: BA) is a positive development in U.S./China trade relations and good news for Boeing. It helps reinforce the investment case for the stock. The key argument supporting buying the stock in 2026 is t
The recent confirmation that China would buy 200 737 model jets from Boeing (NYSE: BA) is a positive development in U.S./China trade relations and good news for Boeing. It helps reinforce the investment case for the stock. The key argument supporting buying the stock in 2026 is the considerable upside potential from executing its existing backlog and contracts.
The recent agreement with China will contribute to Boeing's backlog. The existing backlog stood at a record $695 billion at the end of the first quarter. The figure represents the sum total of Boeing's estimated revenue from 2026 to deep into 2031.
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Most of the backlog is in the commercial airplanes segment (BCA).
No one doubts that Boeing has great growth prospects on account of its backlog and the ongoing recovery in commercial aerospace, but the question is whether it can deliver on them profitably. It's a valid question after years of high-profile groundings of the 737 MAX; manufacturing quality issues; Federal Aviation Administration (FAA) restrictions on Boeing's production and deliveries of the 737 MAX and 787 airplanes; multibillion-dollar charges on fixed-price development contracts at Boeing Defense, Space & Security (BDS); and certification delays on the new 777X.
These challenges are best seen in Boeing's free cash flow (FCF) generation over the last few years. I've previously discussed Boeing's cash flow and debt issues and how they impact strategic thinking.
There are two ways to look at current matters, and management's guidance for FCF of $1 billion to $3 billion in 2026. The higher end of the range would put Boeing at 57.6 times FCF for 2026.
The cautious view is that the valuation reflects ongoing issues at Boeing, and until the company can demonstrate some improvement, that's how investors should value it.
