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Why Is Boeing (BA) Down 17.2% Since Last Earnings Report?

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It has been about a month since the last earnings report for Boeing (BA). Shares have lost about 17.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Boeing due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Boeing Q1 Earnings Miss Estimates, Revenues Decline Y/Y

Boeing incurred an adjusted loss of $2.75 per share for first-quarter 2022, much wider than the Zacks Consensus Estimate of a loss of 26 cents. Also, the bottom line deteriorated from the year-ago quarter’s loss of $1.53.

Including one-time items, the company posted a GAAP loss of $2.06 per share compared with a loss of 92 cents incurred in the first quarter of 2021.

The year-over-year downside is attributable to pre-tax charges incurred for impacts of the war in Ukraine.

Revenues

In the quarter under review, Boeing’s revenues amounted to $13.99 billion, which missed the Zacks Consensus Estimate of $16.01 billion by 12.6%. The top line also declined 8% from the year-ago quarter’s figure of $15.22 billion.

This decline was due to lower year-over-year revenues registered by the company’s Commercial Airplanes as well as Defense, Space & Security business units.

Total Backlog

Backlog at the end of first-quarter 2022 decreased to $370.84 billion from $377.50 billion at the end of 2021.

Segmental Performances

Commercial Airplane: Revenues at this segment dropped 3% year over year to $4.16 billion, primarily on account of the timing of wide-body deliveries. The segment incurred an operating loss of $859 million compared with a loss of $856 million in the year-ago quarter.

Boeing delivered 95 commercial planes during the quarter under review, up 23% year over year.

Backlog for this segment remained healthy with over 4,200 airplanes valued at $291 billion.

Boeing Defense, Space & Security (BDS): This segment recorded revenues worth $5.48 billion in the first quarter, reflecting a year-over-year decline of 24%, primarily due to lower volume and charges on fixed-price development programs, including VC-25B and T-7A Red Hawk.

Meanwhile, this unit incurred an operating loss of $929 million against an operating income of $405 million in the year-ago quarter.

Backlog at BDS was $60 billion, 33% of which comprised orders from international clients.

Global Services: Revenues at this segment improved 15% to $4.31 billion on account of higher commercial services volume and favorable mix. This unit generated an operating income of $632 million compared with $441 million in the year-ago quarter.

Boeing Capital Corporation (BCC): This segment reported quarterly revenues of $46 million compared with $60 million in the year-ago quarter.

At the end of first-quarter 2022, BCC's portfolio balance was $1.6 billion.

Financial Condition

Boeing exited first-quarter 2022 with cash and cash equivalents of $7.41 billion and short-term and other investments of $4.87 billion. At the end of 2021, the company had $8.05 billion of cash and cash equivalents and $8.19 billion of short-term and other investments. Long-term debt amounted to $55.15 billion at the end of first-quarter 2022, down from $56.81 billion at 2021 end.

The company’s operating cash outflow as of Mar 31, 2022 was $3.22 billion compared with $3.39 billion at the end of first-quarter 2021.

Free cash outflow totaled $3.57 billion at the end of first-quarter 2022 compared with $3.68 billion at the end of first-quarter 2021.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -96.18% due to these changes.

VGM Scores

At this time, Boeing has a poor Growth Score of F, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Boeing has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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