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Why Is Boeing (BA) Down 8.4% Since Last Earnings Report?
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A month has gone by since the last earnings report for Boeing (BA - Free Report) . Shares have lost about 8.4% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Boeing Q1 Earnings Top, Down Y/Y on Lower 737 Deliveries
Boeing reported adjusted earnings of $3.16 per share for first-quarter 2019, which outshined the Zacks Consensus Estimate of $3.11 by 1.6%. The bottom line, however, reflected a decline of 13% from $3.64 registered in the year-ago quarter. This year-over-year downside was on account of lower revenues.
GAAP earnings came in at $3.75 per share compared with $4.15 registered in the first quarter of 2018.
Revenues
In the quarter under review, the company's revenues amounted to $22.92 billion, which exceeded the Zacks Consensus Estimate of $22.26 billion by 3%. However, the top line dropped 2% from the year-ago quarter’s figure of $23.38 billion. This decline was on account of lower 737 deliveries.
Total Backlog
Backlog at the end of first quarter 2019 slipped to $487 billion from $490.48 billion at the end of 2018.
Segmental Performances
Commercial Airplane Segment: Revenues at this segment dropped 9% to $11.82 billion due to lower 737 deliveries. Also, operating margin contracted 100 basis points (bps) year over year to 9.9% on account of weak revenue performance.
Boeing delivered 149 commercial planes during the quarter under review, down 19%.
Backlog for this segment remains healthy with over 5,600 airplanes valued at $399 billion.
Boeing Defense, Space & Security (BDS): This segment witnessed a 2% year-over-year improvement in revenues to $6.61 billion in the first quarter. The uptick was driven by higher volume across satellites, weapons and surveillance aircraft programs. Meanwhile, operating margin for the quarter expanded 110 bps year over year to 12.8% on account of a gain on sale of property.
Backlog at BDS was $67 billion, 31% of which comprised orders from international clients.
Global Services: Revenues at this segment improved 17% to $4.62 billion backed by higher volume across the portfolio including the acquisition of KLX Aerospace. Nonetheless, operating margin contracted 230 bps year over year to 14.1% owing to a mix of products and services, and less favorable performance.
Boeing Capital Corporation (BCC): Boeing Capital reported quarterly revenues of $66 million compared with $65 million registered in the year-ago quarter. The segment’s operating earnings summed $20 million, which came in flat with the year-ago quarter’s figure.
At the end of first-quarter 2019, BCC's portfolio balance was $2.5 billion.
Financial Condition
Boeing exited the first quarter with cash and cash equivalents of $6.84 billion, and short-term and other investments of $0.89 billion. At the end of 2018, the company had $7.64 billion of cash and cash equivalents, and $0.93 billion of short-term and other investments. Long-term debt amounted to $11.36 billion at the end of the reported quarter, up from $10.66 billion at 2018-end.
Boeing generated $2.79 billion of operating cash flow at the end of first quarter, down 11.1% year over year. Free cash flow totaled $2.29 billion at first-quarter 2019 end compared with $2.74 billion at the end of first quarter 2018.
Guidance
Due to the uncertainty surrounding the timing and conditions concerning the return to service of the 737 MAX fleet, Boeing has held back the issuance of its guidance for now.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted -23.12% due to these changes.
VGM Scores
Currently, Boeing has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Boeing has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Boeing (BA) Down 8.4% Since Last Earnings Report?
A month has gone by since the last earnings report for Boeing (BA - Free Report) . Shares have lost about 8.4% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Boeing Q1 Earnings Top, Down Y/Y on Lower 737 Deliveries
Boeing reported adjusted earnings of $3.16 per share for first-quarter 2019, which outshined the Zacks Consensus Estimate of $3.11 by 1.6%. The bottom line, however, reflected a decline of 13% from $3.64 registered in the year-ago quarter. This year-over-year downside was on account of lower revenues.
GAAP earnings came in at $3.75 per share compared with $4.15 registered in the first quarter of 2018.
Revenues
In the quarter under review, the company's revenues amounted to $22.92 billion, which exceeded the Zacks Consensus Estimate of $22.26 billion by 3%. However, the top line dropped 2% from the year-ago quarter’s figure of $23.38 billion. This decline was on account of lower 737 deliveries.
Total Backlog
Backlog at the end of first quarter 2019 slipped to $487 billion from $490.48 billion at the end of 2018.
Segmental Performances
Commercial Airplane Segment: Revenues at this segment dropped 9% to $11.82 billion due to lower 737 deliveries. Also, operating margin contracted 100 basis points (bps) year over year to 9.9% on account of weak revenue performance.
Boeing delivered 149 commercial planes during the quarter under review, down 19%.
Backlog for this segment remains healthy with over 5,600 airplanes valued at $399 billion.
Boeing Defense, Space & Security (BDS): This segment witnessed a 2% year-over-year improvement in revenues to $6.61 billion in the first quarter. The uptick was driven by higher volume across satellites, weapons and surveillance aircraft programs. Meanwhile, operating margin for the quarter expanded 110 bps year over year to 12.8% on account of a gain on sale of property.
Backlog at BDS was $67 billion, 31% of which comprised orders from international clients.
Global Services: Revenues at this segment improved 17% to $4.62 billion backed by higher volume across the portfolio including the acquisition of KLX Aerospace. Nonetheless, operating margin contracted 230 bps year over year to 14.1% owing to a mix of products and services, and less favorable performance.
Boeing Capital Corporation (BCC): Boeing Capital reported quarterly revenues of $66 million compared with $65 million registered in the year-ago quarter. The segment’s operating earnings summed $20 million, which came in flat with the year-ago quarter’s figure.
At the end of first-quarter 2019, BCC's portfolio balance was $2.5 billion.
Financial Condition
Boeing exited the first quarter with cash and cash equivalents of $6.84 billion, and short-term and other investments of $0.89 billion. At the end of 2018, the company had $7.64 billion of cash and cash equivalents, and $0.93 billion of short-term and other investments. Long-term debt amounted to $11.36 billion at the end of the reported quarter, up from $10.66 billion at 2018-end.
Boeing generated $2.79 billion of operating cash flow at the end of first quarter, down 11.1% year over year. Free cash flow totaled $2.29 billion at first-quarter 2019 end compared with $2.74 billion at the end of first quarter 2018.
Guidance
Due to the uncertainty surrounding the timing and conditions concerning the return to service of the 737 MAX fleet, Boeing has held back the issuance of its guidance for now.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted -23.12% due to these changes.
VGM Scores
Currently, Boeing has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Boeing has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.