• The Boeing Company (NYSE:BA) is down 18.4% from its recent peak in November, but it’s off just 5.5% year-to-date (YTD).
• Recently, Boeing reported slightly lower revenue but positive free cash flow for Q4, along with higher 737 Max deliveries.
• Investors should consider pouncing even though BA stock still has a high P/E ratio on a forward basis.

Boeing stock has drifted lower lately, falling from its recent peak of $233.09 to $190.19 as of March 17. That’s a drop of 18.4% in the last four months. However, BA stock is off only 5.5% year-to-date (YTD) from the end of 2021, when it was at $201.32.

That is not as bad as many other stocks. In fact, given the turnaround that seems to be occurring with the airplane maker’s earnings and deliveries, BA stock could be a good buy. It seems to be at an opportune inflection point for value investors.

Where Things Stand With Boeing Now

On Jan. 26, Boeing reported its fourth-quarter revenue fell 3% year-over-year (YOY) and was actually lower than in Q3. It fell from $15.3 billion in Q3 to $14.8 billion in Q4, a drop of 3.17%. The company said this reflected higher commercial revenue but lower defense spending.

However, more importantly, Boeing reported its first positive operating cash flow in a good while and a return to positive free cash flow (FCF).

The company also said its Q4 operating cash flow was $716 million, and after $222 million in capex spending, the FCF was $494 million. This was significantly better than last year. In 2020, its Q4 FCF was negative $4.27 billion, and last quarter, FCF was negative $507 million.

Boeing says it took a charge in Q4 for its 737 Max production, but it is now delivering the planes and working on their “safe return to service.” The 737 program is currently producing at a rate of 26 per month and is “progressing” to 31 per month.

Recently, Barron’s reported that Boeing has delivered 54 planes so far this year, but will need to deliver 53 more to meet Wall Street expectations for the quarter. The online magazine reports analysts still expect Boeing will deliver 606 planes during 2022, up from 340 last year. At that rate, it will deliver just over 50 planes per month, below the 53 needed in March.

Last month, Boeing delivered 22 jets, a decrease from 32 in January. It is having quality problems in its manufacturing process.

Where Analysts Stand on Boeing

Nevertheless, analysts are still positive on Boeing stock for the rest of 2022 and 2023. For example, Seeking Alpha reports 20 analysts expect to see sales rise to $81.3 billion, up more than 30% from $62.3 billion in 2021.

That puts BA stock on a price-to-sales (P/S) ratio of just under 1.4x. With a $93.2 billion forecast for 2023, the P/S multiple is just 1.2 times. However, given its low earnings projections, BA stock still has a high P/E ratio of more than 54x.

As a result, these analysts now have a price target of $252.86, up 33% from yesterday’s price. That is not an unreasonable a price target.

What BA Stock Could Be Worth

Let’s look at the company’s FCF. If we assume the company can produce a 5% FCF margin by the end of 2022 and a 10% FCF margin by the end of 2023, it could produce $9.3 billion in FCF by the end of 2023.

Therefore, we can assume the market will value Boeing on a conservative 6.5% FCF yield, which is the same as multiplying its FCF by 15.4. That implies its market value will be $143 billion.

This is 30% over yesterday’s market capitalization of $110.1 billion, according to Yahoo! Finance. That implies a price target of $247.25, which is not too far from the $252.86 Seeking Alpha price target.

You can see this upside, based on the company’s growing FCF, is clearly possible. So, even though BA stock now has a high price-to-earnings multiple, a 30% to 33% upside is very reasonable based on its growing free cash flow.

On the date of publication, Mark Hake did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.