Boeing reports third-quarter results Tuesday, October 27, before the market opens, and the number to watch is free cash flow. The company has guided to the low hundreds of millions of dollars for the quarter, even after a $700 million payment to the Department of Justice.
The bottom line going in: the last reported quarter showed progress and damage in equal measure. Second-quarter revenue rose 8.0% to $24.56 billion and deliveries reached 171. Free cash flow turned positive at $631 million. Yet the core loss of $0.76 per share was well short of the $0.34 loss analysts had expected, with a $280 million VC-25B charge doing much of the harm. The shares are down 12.8% year to date.
What analysts expect
This quarter the market looks for revenue growth of 4% year on year, a long way below the 30.4% Boeing posted in the same quarter last year. Analysts have mostly held their estimates steady over the past 30 days. Boeing has missed Wall Street revenue estimates several times in the last two years. Investors will note the gap between the stock and the average price target: $188.10 against $267.22. Boeing is up 2% over the past month, while aerospace and defense shares have fallen 4.9% on average.
Max 10 certification
The program news is better. On October 20, Transportation Secretary Sean Duffy marked certification of the 737 Max 10. “This has been almost a ten-year process getting to this day of certification, which, by the way, is huge,” he said. Marketplace Morning Report put airline orders for the jet above 1,400. Regulators found a software glitch this year and determined it was not a flight safety issue. Watch for confirmation of first deliveries in 2027 and for progress on the 737 ramp to 47 a month.
Oil adds pressure
Fuel is the outside variable. Benchmark West Texas Intermediate crude stood at $107.89 a barrel on October 20. Jim Cramer once quipped, “Every time crude goes up a dollar, Boeing stock goes down a dollar,” but later called that logic flawed, arguing that airlines need more fuel-efficient planes as oil rises. RTX chief executive Chris Calio made a similar point: “There’s the concern around jet fuel and airline health and pricing, but the demand is still there.”
For Boeing, a good morning means positive free cash flow despite the DOJ payment, plus a firm Max 10 delivery schedule.
Sources
- Boeing, Coca-Cola Earnings Previews: A Turnaround Story and a Defensive Staple Face the Same Test
- The Week Ahead: Can Big Tech Earnings Save the Day?
- Boeing (BA) reports Q3: everything you need to know ahead of earnings
Photo: Oleg Yunakov (CC BY-SA 4.0)
