reports profit second quarter Wednesday morning. Investors shouldn’t expect much good news, but the results shouldn’t be that important to the stock.
For the quarter, Wall Street expects a loss of 81 cents a share on revenue of $16.5 billion. For last year’s quarter,
(ticker: BA) reported an adjusted loss of nearly $5 a share from $11.8 billion in sales.
Those aren’t great results, but the commercial space giant is still digging out of the twin crises of the 737 MAX and Covid-19. Things are so challenging for the company that it can report almost anything without shocking investors.
“There are plenty of items that are unknown that something unexpected could be…. More than likely it will miss,” said analyst Edward Jones Jeff Windau tells Barron’s. “Cash burn” [will be] in focus.” Wall Street expects Boeing to burn an additional $2.8 billion in cash, after consuming $3.7 billion in the first quarter.
In the second quarter of 2018, before Covid-19 and the global grounding of the 737 MAX in March 2019 after two fatal crashes within five months, Boeing made $3.33 per share from $24.3 billion in revenue. Free cash flow was $4.3 billion. Such figures are still a long way off.
Commercial Air Travel is improving, Although. In the past week, air traffic in the US decreased by about 21% compared to the same week in 2019. Three months ago, air traffic in the US was about 42% lower than the same week in April 2019.
That improvement will not be reflected in Boeing figures. “Boeing’s 2Q delivery numbers were poor and it announced another cut to 787 production,” Vertical Research Partners analyst Rob Stallard wrote in a preview report. “This is a setback, with some flow to key suppliers such as [
] and [
]. We think Boeing will announce another monstrous 2Q loss.” He predicts cash burn of about $2.8 billion, in line with Wall Street’s consensus estimate.
Stallard and Windau both assess Boeing shares of Hold. Stallard’s price target is $153 per share. Windau does not publish price targets for stocks he handles.
Stallard notes in his report that demand is improving, “particularly for new narrow-body aircraft.”
What investors want to hear about is a new aircraft that will be developed by Boeing. CEO Dave Calhoun may not be ready to tip his hand just yet. Boeing is investigating what it calls the NMA, or a new medium-sized aircraft, but details about its size and engine technology — and when it might develop — have not been discussed in detail with investors. In addition, the NMA hasn’t really been discussed on a earnings conference call since January.
What happens to the stock after the profit is a mystery. Over the past eight quarters, stocks have fallen five times and have risen three times. Options markets mean that the stock will move up or down about 3% after earnings.
That’s not too much for all the turmoil the company has faced over the past 24 months.
Shares of Boeing are down 1% in recent trading to $223.61. Year-to-date, Boeing’s shares are up about 5%, lagging behind comparable earnings from the
Dow Jones industrial average.
Since the first quarter figures, Boeing shares are down about 5% and about 10 percentage points behind the market.
Write to Al Root at firstname.lastname@example.org