Boeing Stock Nosedives Then Recovers After Missing Earnings, EPS

Key takeaways

• Boeing lost $1.75 per share, with analysts expecting earnings of $0.26 per share
• The airliner is still recovering from the pandemic and the grounding of the 787 Max
• The company expects short-term turbulence with its stock, but the long-term outlook is smoother

Boeing is one of the largest aerospace companies in the world and a popular investment option for both retail and institutional investors. It’s been in business for over a century, making it an essential part of the economy nationally and globally.

However, the company has had its share of issues in the last few years, and the stock has paid the price. With the recent announcement of fourth-quarter earnings, is now the time to buy shares of Boeing? Here is what investors need to know, and how Q.ai can help investors navigate the markets amid earnings reports.

Boeing in the news

Boeing posted a $650 million operating loss in Q4 of 2022 and blamed it on supply chain disruptions that drove up the cost of parts. The company recently delivered its final 747 to Atlas Air and has been steadily moving into producing smaller jets, including the 787.

The supply chain woes weren’t the only cause of the losses, as the production delays meant Boeing had to compensate 787 customers. Further tripping up Boeing’s profitability was the 737 Max, a model with two fatal crashes. All 737 Max planes were grounded in March 2019 for 20 months.

Problems were further fueled by the arrival of the pandemic in March 2020. The pandemic caused the cancellation of hundreds of plane orders, which Boeing was recently starting to overcome.

Analysts had predicted that Boeing would earn $0.26 a share for the fourth quarter of 2022, but the company lost $1.75 a share. For perspective, Boeing lost $7.69 a share in the fourth quarter of 2021, making the loss in the current quarter mild in comparison.

Boeing predicts its revenues will be unstable going forward as it recovers from the supply chain issues, canceled orders and quality issues in its 787 Dreamliners and Max that must be fixed. Another problem is that Boeing earned less than expected when selling some of its planes.

Its stock price has since recovered from its lows in June 2022 but has been swinging up and down as the company reported earnings. The stock opened the year at $195.39 and has seen a 13% gain since then.

Boeing income statement review

For the fourth quarter of 2022, Boeing reported revenues of $19.98 billion, a 35% increase from the fourth quarter of 2021. It had an operating loss of $353 million and a net loss of $663 million.

Its operating cash flow was $3.45 billion. Adjusting for additions to its property, plants and equipment of negative $326 million, it had a free cash flow of $3.13 billion. It also had $14.61 billion in cash, $2.6 billion in marketable securities and a total of $57 billion in consolidated debt.

Boeing has access to credit of $12 billion but has not touched these reserves.

Boeing balance sheet review

The company’s fourth-quarter 2022 balance sheet showed a total of $14.61 billion in cash and cash equivalents, $2.60 billion in short-term and other investments, $2.51 billion in accounts receivables, $8.63 billion in unbilled receivables as well as other asset classes worth $81.15 billion for a net current total of $109.52 billion.

It had $10.2 billion in accounts payable, $21.58 billion in accrued liabilities, $53.08 billion in advances and a total of $90.052 billion in current liabilities.

Short-term outlook

Boeing noted that 2022 was the first year it had positive operating cash flow since the crashes involving the 737 Max and subsequent investigation that revealed the company outsourced the production of the plane’s software to $9-per-hour software engineers and college graduates.

This reversal of fortunes demonstrates that Boeing has more than learned from its mistakes and restored buyer confidence in its jets. It has reworked the issues with the 737 Max and shifted its production to smaller jets.

The company is on track to recover nicely from the 737 Max issues and the crash in air travel caused by the pandemic. While its future is not in question, its stock price may experience volatility in the short term.

Longer-term outlook

Boeing has said its income will be unpredictable for the next few quarters. Grounded planes, canceled orders, excess production costs and supply chain issues must be worked through before the company can operate reliably.

A backlog of Dreamliner and Max jets need to be sold, but sales are improving as Boeing sold 152 commercial jets during the fourth quarter. This is more than a 50% increase in sales year-over-year.

The fact that the company is aware that it will experience instability in income indicates that its management is working to guide the company through rough times. Boeing is a blue chip stock, which means it’s reliable and suitable for investors who want to hold for the long term. Investors wanting to add the stock to their portfolio may do well by buying when it is at a low and holding.

If there is any uncertainty about when to buy, investors should consider the Value Vault Kit from Q.ai. This invests in trending companies that could outperform the market in the short term and uses artificial intelligence to spot these investment opportunities.

The bottom line

Boeing stock is an excellent long-term investment. The company has been through many challenges in the past couple of years, and the short-term outlook still has issues the company needs to overcome.

Fortunately, Boeing has always come out stronger and more innovative in the past, and there is no reason to think this time is any different. Its products are top-of-the-line and efficient, and the company has a solid global presence. If you can handle the ups and downs over the short term, you could be rewarded in the long run.

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