Boeing Falls 3% as Justice Department Begins Criminal Investigation: Is it Time to Sell BA?

Shares of Boeing Co. (BA) are down more than 3% to start the week after news of the US Justice Department’s criminal investigation broke. 

The airliner is being probed for its role in a recent near-disaster aboard a January 5 flight in which a door plug blew out, leaving a hole in the 737 MAX 9 jet and leading to an emergency landing. The issue went viral online as videos captured via cellphone showcased the chaos from passenger POVs.

Nobody was in the seat next to the hole, thankfully, and there were no injuries as a result of the damage. That being said, Boeing is up against a PR nightmare. The company is trying to dispel fear and make the case for its aircraft being safe, but if market sentiment is any indicator, these efforts have been unsuccessful. BA stock is down more than 25% this year.

It could be getting worse, too, if the US Justice Department finds Boeing Co. at fault for the issue. So far pilots and attendants onboard the Jan. 5 flight have been interviewed, and passengers have already been notified that they could be entitled to compensation as victims. While Alaska Airlines offered passengers $1,500 already, a much bigger payday could be on the way.

To put this issue in perspective, Boeing has been hit with hefty fines before – forced to issue a $2.5 billion payout just 3 years ago after multiple 737 MAX planes went down in deadly crashes. 

While these planes were traced back to faulty flight control software and not structural inefficiencies, and thankfully there were no deaths on the Jan. 5 flight, it does go to show how costly these types of issues can be for companies like Boeing.

It will likely be a while before the US Justice Department arrives at any sort of verdict. In the meantime, should BA investors continue to weather the storm, or is this your sign to get out of the stock while you still can?

We’ve taken a look through the VectorVest stock analysis software and found 3 things you need to see…

BA Has Fair Upside Potential, But Poor Safety and Timing Holding it Back

VectorVest is a proprietary stock ratings system that saves you time and stress while empowering you to win more trades. You’re given all the insights you need in 3 simple ratings: relative value (RV), relative safety (RS), and relative timing (RT).

Each sits on its own scale of 0.00-2.00 with 1.00 being the average, making interpretation quick and easy. Better yet, you’re given a clear buy, sell, or hold recommendation based on the overall VST rating for any given stock at any given time. As for BA, here’s what investors need to know:

• Fair Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (projected 3 years out), AAA corporate bond rates, and risk. It offers much better insight than a simple comparison of price to value alone. BA has a fair RV rating of 0.89, just below the average.
• Poor Safety: The RS rating is a risk indicator calculated from an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. BA has a poor RS rating of 0.76 right now.
• Poor Timing: The RT rating is based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year. The RT rating of 0.55 is poor for BA and reflects the stock’s challenges over the past few months.

The overall VST rating of 0.73 is poor. It’s accompanied by a SELL recommendation in the VectorVest system. We encourage you to act fast and learn more about this situation through a free stock analysis at VectorVest if you’re currently invested in BA.

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VectorVest advocates buying safe, undervalued stocks, rising in price. BA is falling Monday as news of a criminal inquiry is making the rounds after the airline manufacturer’s 737 MAX 9 experienced a panel blowout. The stock has fair upside potential but its safety and timing are poor.

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