Boeing Stock Is Rising After It Posts Earnings Beat, Production Increase

It’s a loss, but beating estimates is good news. Coming into the earnings report, Boeing had missed Wall Street’s quarterly earnings estimates in 14 of the past 17 quarters. Wall Street has had trouble projecting Boeing’s earnings given the Covid-19 pandemic and the nearly two-year grounding of the MAX jet that began in March 2019.

Estimates for the current quarter ranged from a loss of almost $1.30 a share to a loss of 35 cents a share, according to FactSet. For rival
Airbus
(AIR. France), forecasts for the second quarter range from a profit of $1.25 a share to $1.75.

Along with better-than-expected earnings, Boeing said it plans to ramp up 737 MAX production to 38 jets a month. Production has been running around 31 a month in recent quarters. Investors want to see higher production because that is a sign that supply-chain issues affecting the industry are abating.

More planes, of course, also mean more sales and earnings. Boeing stock was up 6.6% in midday trading, while the
S&P 500
had fallen 0.2%. The
Dow Jones Industrial Average
gained 0.1%.

Healthy free cash flow, at $2.6 billion, aided the shares as well. “Big loss, big cash flow,” wrote Vertical Research Partners analyst Rob Stallard in a Wednesday report, saying favorable timing of payments to Boeing helped boost the total.

The company maintained a forecast that free cash flow for 2023 will be about $4 billion. Stallard rates Boeing shares Hold and has a $226 price target for the stock.

“We had a solid second quarter with improved deliveries and strong free cash flow generation,” said CEO Dave Calhoun in a news release. “While we have more work ahead, we are making progress in our recovery and driving stability in our factories and the supply chain to meet our customer commitments.”

All the numbers should be a relief for investors. Recent earnings misses have introduced a lot of volatility into Boeing stock. Shares have ranged from roughly $113 to $241 over the past two years. The $128 difference is almost 70% of the average stock price over that span. Airbus shares have ranged from roughly $87 to $135—a span that is about 45% of the average stock price.

Along with MAX- and Covid-related problems, Boeing’s defense business recently ran into some issues as high inflation ate away at profits on fixed-price contracts. There are still some struggles. Sales in Boeing’s Defense, Space & Security segment were flat year over year at about $6.2 billion, but the segment lost $527 million. It earned $71 million in the same quarter last year.

Coming into the earnings, Boeing stock was up on optimism about commercial aerospace. Shares had gained 35% over the past 12 months, while the S&P 500 and Dow Jones Industrial Average were up about 15% and 11%, respectively.

The optimism appears justified. Boeing delivered 136 commercial jets in the second quarter, more than the 103 Wall Street had projected, and up from 121 in the second quarter of 2022.

Boeing maintained its 2023 delivery guidance. It expects to deliver about 400 to 450 737 MAX jets and 70 to 80 787 Dreamliner jets.

Write to Al Root at [email protected]