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Boeing Stock Drops 25.6% in 3 Months: Should You Exercise Caution?
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Key Takeaways
Boeing shares fell 25.6% in three months as execution risks and delays weighed on performance.
BA's record $745B backlog and major defense contract wins offer significant long-term growth opportunities.
Delayed aircraft deliveries, 777X certification hurdles and weak ROIC continue to challenge Boeing's recovery.
The Boeing Company’s (BA - Free Report) shares have lost 25.6% over the past three months compared with the Zacks Aerospace-Defense industry’s decline of 15.1%. Boeing's execution risk, certification delays, labor shortage and a high debt load are concerning. Trade tensions between the United States and China may cause further delay or disruption of deliveries, hurting its operational performance.
Image Source: Zacks Investment Research
Other defense stocks, such as RTX Corporation (RTX - Free Report) and Lockheed Martin (LMT - Free Report) , have delivered mixed performance during the same period. Shares of RTX have lost 10.5%, while those of Lockheed Martin have risen 1%. RTX is supported by a steady recovery in commercial aerospace, strong defense orders and a robust backlog. Rising global air traffic, higher commercial OEM and aftermarket sales, and strong demand for large commercial engines should aid growth. Lockheed Martin benefits from a robust backlog, increasing munitions production and strong alignment with United States and allied defense priorities, providing a foundation for sustained growth.
Given Boeing’s underperformance, investors may be weighing their next move. A closer examination of the company’s key challenges, growth drivers and overall investment prospects can help determine whether the stock presents an opportunity or warrants caution.
Key Headwinds Facing BA Stock
Labor shortage remains a concern for aerospace-defense manufacturers like Boeing. High attrition among early-career employees has further aggravated the labor shortage, particularly as younger workers, who account for a significant portion of the manufacturing and engineering workforce, increasingly seek higher-paying opportunities and greater workplace flexibility outside the aerospace and defense industry. If these workforce challenges persist, Boeing could face further disruptions to its production schedules and timely aircraft deliveries, compounding its existing operational difficulties.
Despite a growing order book, Boeing continues to face risks from production delays, delivery disruptions and aircraft order cancellations. Aircraft order cancellations during the nine months ended Sept. 30, 2026, totaled $3.164 billion, primarily involving 737 and 787 aircraft. Although Boeing's Commercial Airplanes backlog increased to $611.8 billion from $567.3 billion at the end of 2025, continued production challenges could threaten its ability to convert this backlog into timely deliveries and revenues. Boeing is targeting stabilization of its 737 production rate at 47 aircraft per month in 2027, with further increases contingent on achieving consistent operational performance. Delayed production-rate increases are already adversely impacting its financial position, operating results and cash flows.
Additionally, the 777X program remains a significant execution risk. Boeing continues to expect the first 777-9 delivery in 2027, following years of delays, while the 777-8 Freighter is expected approximately two years after the 777-9's first delivery. The 777-8 passenger aircraft is not expected before 2030. The program continues to face certification and flight-testing requirements, alongside an engine durability issue that requires a solution to be incorporated and certified with the FAA. These challenges could result in additional production costs and financial losses.
Factors Acting in Favor of BA Stock
During the third quarter, Boeing's total backlog increased to a record $745 billion, reflecting strong demand across its commercial aircraft, defense and services businesses. During the quarter, the segment secured 300 net aircraft orders, including orders from Turkish Airlines, Ethiopian Airlines and Lufthansa. This strong order pipeline provides considerable long-term revenue visibility and supports future production growth. The expanding backlog also reinforces the company's position in the global commercial aerospace market, where demand for new aircraft remains supported by airline fleet modernization and replacement requirements.
Boeing's Defense, Space & Security segment delivered strong results, with third-quarter revenues increasing 15% year over year to $7.9 billion. Operating earnings surged 332% to $492 million. The improvement reflected higher business volume, better operational performance and a $252 million gain from the sale of HRL Laboratories. Boeing was selected by the U.S. Navy to design, build and deliver the F/A-XX next-generation fighter aircraft, marking a significant opportunity to expand its position in advanced military aviation. The segment also secured a seven-year contract to expand PAC-3 Seeker production.
Estimates for BA Stock
The Zacks Consensus Estimate for Boeing’s 2026 earnings per share (EPS) indicates a year-over-year improvement of 82.71%.
Image Source: Zacks Investment Research
The consensus estimate for RTX’s 2026 EPS suggests year-over-year growth of 22.9%. The Zacks Consensus Estimate for Lockheed Martin’s 2026 EPS implies a year-over-year rise of 32.6%.
BA’s Earnings Surprise History
The company beat on earnings in one of the trailing four quarters and missed in the other three, delivering an average negative surprise of 105.43%.
Image Source: Zacks Investment Research
BA Stock’s Poor ROIC
The image below shows that BA stock’s trailing 12-month return on invested capital (ROIC) not only lags the peer group’s average return but also reflects a negative figure. This suggests that the company's investments are not yielding sufficient returns to cover its expenses.
Image Source: Zacks Investment Research
BA Stock Trades at a Discount
In terms of valuation, Boeing’s forward 12-month price-to-sales (P/S) is 1.27X, a discount to the industry’s average of 2.18X. This suggests that investors will be paying a lower price than the company's expected sales growth compared with that of its peer group.
Image Source: Zacks Investment Research
What Should Be the Next Move?
Persistent labor shortages, production delays, aircraft cancellations and 777X program setbacks could hinder Boeing's delivery schedules, increase costs and weigh on financial performance. However, strong aircraft demand, a record backlog, major defense contract wins and improving defense operations provide long-term growth opportunities and support Boeing's recovery.
Given Boeing’s ongoing execution challenges, weak stock price performance and unfavorable ROIC, investors may be better off avoiding the stock for now. BA currently carries a Zacks Rank #4 (Sell), reinforcing a cautious outlook on its near-term investment prospects. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
View the Zacks #1 Rank List
Image: Bigstock
Boeing Stock Drops 25.6% in 3 Months: Should You Exercise Caution?
Key Takeaways
The Boeing Company’s (BA - Free Report) shares have lost 25.6% over the past three months compared with the Zacks Aerospace-Defense industry’s decline of 15.1%. Boeing's execution risk, certification delays, labor shortage and a high debt load are concerning. Trade tensions between the United States and China may cause further delay or disruption of deliveries, hurting its operational performance.
Image Source: Zacks Investment Research
Other defense stocks, such as RTX Corporation (RTX - Free Report) and Lockheed Martin (LMT - Free Report) , have delivered mixed performance during the same period. Shares of RTX have lost 10.5%, while those of Lockheed Martin have risen 1%. RTX is supported by a steady recovery in commercial aerospace, strong defense orders and a robust backlog. Rising global air traffic, higher commercial OEM and aftermarket sales, and strong demand for large commercial engines should aid growth. Lockheed Martin benefits from a robust backlog, increasing munitions production and strong alignment with United States and allied defense priorities, providing a foundation for sustained growth.
Given Boeing’s underperformance, investors may be weighing their next move. A closer examination of the company’s key challenges, growth drivers and overall investment prospects can help determine whether the stock presents an opportunity or warrants caution.
Key Headwinds Facing BA Stock
Labor shortage remains a concern for aerospace-defense manufacturers like Boeing. High attrition among early-career employees has further aggravated the labor shortage, particularly as younger workers, who account for a significant portion of the manufacturing and engineering workforce, increasingly seek higher-paying opportunities and greater workplace flexibility outside the aerospace and defense industry. If these workforce challenges persist, Boeing could face further disruptions to its production schedules and timely aircraft deliveries, compounding its existing operational difficulties.
Despite a growing order book, Boeing continues to face risks from production delays, delivery disruptions and aircraft order cancellations. Aircraft order cancellations during the nine months ended Sept. 30, 2026, totaled $3.164 billion, primarily involving 737 and 787 aircraft. Although Boeing's Commercial Airplanes backlog increased to $611.8 billion from $567.3 billion at the end of 2025, continued production challenges could threaten its ability to convert this backlog into timely deliveries and revenues. Boeing is targeting stabilization of its 737 production rate at 47 aircraft per month in 2027, with further increases contingent on achieving consistent operational performance. Delayed production-rate increases are already adversely impacting its financial position, operating results and cash flows.
Additionally, the 777X program remains a significant execution risk. Boeing continues to expect the first 777-9 delivery in 2027, following years of delays, while the 777-8 Freighter is expected approximately two years after the 777-9's first delivery. The 777-8 passenger aircraft is not expected before 2030. The program continues to face certification and flight-testing requirements, alongside an engine durability issue that requires a solution to be incorporated and certified with the FAA. These challenges could result in additional production costs and financial losses.
Factors Acting in Favor of BA Stock
During the third quarter, Boeing's total backlog increased to a record $745 billion, reflecting strong demand across its commercial aircraft, defense and services businesses. During the quarter, the segment secured 300 net aircraft orders, including orders from Turkish Airlines, Ethiopian Airlines and Lufthansa. This strong order pipeline provides considerable long-term revenue visibility and supports future production growth. The expanding backlog also reinforces the company's position in the global commercial aerospace market, where demand for new aircraft remains supported by airline fleet modernization and replacement requirements.
Boeing's Defense, Space & Security segment delivered strong results, with third-quarter revenues increasing 15% year over year to $7.9 billion. Operating earnings surged 332% to $492 million. The improvement reflected higher business volume, better operational performance and a $252 million gain from the sale of HRL Laboratories. Boeing was selected by the U.S. Navy to design, build and deliver the F/A-XX next-generation fighter aircraft, marking a significant opportunity to expand its position in advanced military aviation. The segment also secured a seven-year contract to
expand PAC-3 Seeker production.
Estimates for BA Stock
The Zacks Consensus Estimate for Boeing’s 2026 earnings per share (EPS) indicates a year-over-year improvement of 82.71%.
Image Source: Zacks Investment Research
The consensus estimate for RTX’s 2026 EPS suggests year-over-year growth of 22.9%. The Zacks Consensus Estimate for Lockheed Martin’s 2026 EPS implies a year-over-year rise of 32.6%.
BA’s Earnings Surprise History
The company beat on earnings in one of the trailing four quarters and missed in the other three, delivering an average negative surprise of 105.43%.
Image Source: Zacks Investment Research
BA Stock’s Poor ROIC
The image below shows that BA stock’s trailing 12-month return on invested capital (ROIC) not only lags the peer group’s average return but also reflects a negative figure. This suggests that the company's investments are not yielding sufficient returns to cover its expenses.
Image Source: Zacks Investment Research
BA Stock Trades at a Discount
In terms of valuation, Boeing’s forward 12-month price-to-sales (P/S) is 1.27X, a discount to the industry’s average of 2.18X. This suggests that investors will be paying a lower price than the company's expected sales growth compared with that of its peer group.
Image Source: Zacks Investment Research
What Should Be the Next Move?
Persistent labor shortages, production delays, aircraft cancellations and 777X program setbacks could hinder Boeing's delivery schedules, increase costs and weigh on financial performance. However, strong aircraft demand, a record backlog, major defense contract wins and improving defense operations provide long-term growth opportunities and support Boeing's recovery.
Given Boeing’s ongoing execution challenges, weak stock price performance and unfavorable ROIC, investors may be better off avoiding the stock for now. BA currently carries a Zacks Rank #4 (Sell), reinforcing a cautious outlook on its near-term investment prospects. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.