Boeing earnings missed estimates again. Why the stock is rising.
Boeing missed Wall Street estimates again. But much less than usual. The shares are up.
Boeing (ticker: BA ) reported a first-quarter loss of $1.27 per share on $17.9 billion in sales Wednesday morning. Wall Street was looking for a loss per share of $1.07 and sales of $17.6 billion.
For the same period a year ago, Boeing reported a loss per share of $2.75 on sales of $14 billion.
It is the fourteenth time in the past 17 quarters that Boeing has missed bottom line estimates. By comparison, the company’s rival, Airbus ( AIR.France ), has missed estimates in three of the past 16 quarters.
However, the current shortfall for Boeing is not that great given all the headwinds the company is facing. Revenues are still recovering from the twin problems of the 737 MAX grounding and the impact of Covid-1[ads1]9. The airline has also had delivery and quality issues with its 787 Dreamliner jets.
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Boeing shares are up 3.6% in premarket trading at $209.41. S&P 500 and Dow Jones Industrial Average futures are both flat.
For the first quarter, the company delivered a total of 130 jets, slightly better than the 120 Wall Street had expected and more than the 95 jets it delivered in the first quarter of 2022.
Commercial aviation sales were up to $6.7 billion from $4.2 billion in the year-ago quarter. However, that business segment is not yet generating profits. The operating loss came to 615 million dollars.
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Boeing still expects to deliver between 400 and 450 MAX jets in 2023, meaning production rates will increase to about 38 a month at some point this year.
Defense revenue also rose year-over-year, reaching $6.5 billion, up from $5.5 billion. The operating loss came in at $212 million, but the results included a $245 million charge for the KC-46A tanker program.
Vertical Research Partners analyst Rob Stallard did not expect an earnings beat and predicted more one-time costs such as the tanker expense.
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He recommended focusing on cash flow. Free cash flow was negative $800 million in the quarter. Wall Street expected free cash flow in the first quarter of about positive $1 billion. But Boeing did not change its free cash flow guidelines for the full year. The company still expects to generate free cash flow between $3 billion and $5 billion.
Overall, the quarter was largely as expected, which is a relief for investors.
Boeing is hosting a conference call at 10:30 a.m. ET to discuss the results. Earnings, cash flow, production rates and demand for new aircraft orders will all be topics of discussion.
Boeing shares are up about 15% over the past 12 months, while the S&P 500 and Dow Jones Industrial Average are down 5% and 1%, respectively. A better outlook for air travel as the world moves on from Covid is one reason to improve investor sentiment.
Write to Al Root at allen.root@dowjones.com
