It is difficult to assume an organization enduring worse headlines last quarter than Boeing (NYSE:BA), however the embattled airplane manufacturer posted some unexpectedly positive news on Wednesday in the shape of a good earnings report.
You’ve probably seen the headlines: most notably, the news in January that a door panel flew off considered one of Boeing’s planes in mid-flight. Thankfully, nobody on the Alaska Airlines flight was hurt.
Boeing has been under investigation by federal regulators and was forced to testify before Congress about this and other issues of safety for quite a while. The corporate has also struggled financially, posting one other loss in the primary quarter and for fiscal 2023.
Last month, Boeing announced that CEO Dave Calhoun is stepping down at the tip of the 12 months, while Stan Deal, CEO of Boeing Business Airplanes, retired immediately, and Board Chair Larry Kellner won’t run for re-election.
Nonetheless, Boeing stock jumped on the opening bell on Wednesday after the corporate reported earnings and revenue for its fiscal first quarter that beat estimates. The shares climbed almost 5% on the opening bell to over $177 before settling back right down to around $173 per share in morning trading, still up by about 3%.
Fixing the issues at Boeing
While Boeing’s earnings results beat expectations, they still weren’t great. The airplane manufacturer’s revenue fell 8% 12 months over 12 months to $16.6 billion, while it posted a $355 million net loss. It also reported -$3.4 billion in operating money flow and -$3.9 billion in free money flow.
Those results were largely on account of Boeing management’s decision to scale back the amount of deliveries in an effort to make sure higher safety standards.
“Our first-quarter results reflect the immediate actions we’ve taken to decelerate 737 production to drive improvements in quality,” Boeing President and CEO Dave Calhoun said within the earnings report. “We are going to take the time needed to strengthen our quality and safety management systems, and this work will position us for a stronger and more stable future.”
In its business airlines business, deliveries dropped 36% while revenue fell 31%. Boeing booked 125 net orders through the first quarter, including an order from American Airlines for 85 of its 737-10 airplanes and orders for 28 of its 777X airplanes from various customers, including Ethiopian Airlines. Overall, Boeing delivered 83 airplanes through the quarter, and its backlog consisted of greater than 5,600 planes valued at $448 billion.
Business was higher within the defense, space and security division, as revenue jumped 6% to $7 billion with net income of $151 million, up from a $212 million net loss a 12 months ago this quarter. Boeing also won contracts for 17 of its P-8A Poseidon aircraft for the Royal Canadian Air Force and German Navy and secured a production contract from the U.S. Navy for 17 of its F/A-18 Super Hornets, amongst other contract wins.
Boeing’s defense, space and security segment has a $61 billion backlog, with 31% of its orders coming from customers outside the U.S.
What’s next for Boeing?
It has been a difficult 12 months for Boeing, to say the least. The corporate’s stock price has plunged some 32% 12 months thus far and is off by about 15% over the past 12 months.
Wednesday’s uptick in Boeing shares was likely related to the actions it’s taking to deal with the security concerns and its huge backlog in orders. The sizable backlog should bode well for earnings in future quarters.
Boeing can also be just considered one of two major airline manufacturers, so it shouldn’t be going anywhere. Nonetheless, it is usually headed right into a transition period, not only with its production of latest aircraft but additionally inside its leadership.
Today’s bit of excellent news can have given Boeing a short lived lift, but there remains to be lots of heavy lifting to do, and investors ought to be cautious. It has the potential to be a very good value stock, however it is perhaps a very good idea to attend for more movement toward profitability.