The Boeing Company (BA) is slated to announce its fiscal fourth-quarter results on Wednesday, January 31, 2024. Wall Street projects a 5.5% year-over-year uptick in BA's fourth-quarter revenue, reaching $21.08 billion, while its EPS for the same quarter is expected to come in at a negative $0.79.

Meanwhile, BA’s revenue of $18.10 billion in the third quarter topped analyst estimates of $18.01 billion. Its reported adjusted loss per share of $3.26, on the other hand, was wider than analyst estimates of $2.96. Nevertheless, despite the dimmed third-quarter performance, company executives continue to remain bullish on its prospects.

Dave Calhoun, BA’s president and chief executive officer, affirmed that despite facing near-term challenges, the company continues to make progress in its recovery and remains committed to meeting both its short-term and long-term financial goals.

Furthermore, BA recently unveiled its aircraft delivery figures for 2023, successfully meeting its delivery target and witnessing a 70% surge in net orders during the same year. In 2023, BA delivered 528 aircraft and secured 1,314 net new orders after accounting for cancellations.

This marked an increase from 480 deliveries and 774 net new orders in 2022, making 2023 the company's third-best year, highlighting the robust demand for air travel and aircraft. 

However, despite the impressive aircraft delivery figures, on January 5, 2024, the company came under intense criticism after the door panel of a commercial Boeing 737 Max 9 became dislodged while the aircraft was ascending, causing a significant opening on the side of the plane.

This unfortunate incident alarmed passengers on board and raised questions about the company’s quality control and commitment to safety. Following this incident, the Federal Aviation Administration (FAA) grounded all Max 9s in the United States.

Shares of BA have taken a significant hit as a result of this incident. The stock gained 14.2% over the past three months but plummeted 21.3% over the past month to close the last trading session at $205.19.

Here are the fundamental aspects of BA that could influence its performance in the near term:

Mixed Financials

BA’s total revenues for the fiscal third quarter (ended September 30, 2023) increased 13.5% year-over-year to $18.10 billion. However, during the same quarter, the company’s net loss amounted to $1.64 billion, while its adjusted loss per share came in at $3.26. In addition, its cash and cash equivalents stood at $6.81 billion, down 53.4% compared to $14.61 billion as of December 31, 2022.

Mixed Analyst Estimates

The consensus revenue estimate of $76.79 billion for the fiscal year ended December 2023 represents a 14.7% improvement year-over-year. Meanwhile, the consensus EPS estimate for the same quarter stands at a negative $6.19.

Mixed Profitability

BA’s trailing-12-month EBIT margin of 1.31% is 86.5% lower than the 9.72% industry average. Likewise, its trailing-12-month gross profit margin of 11.44% is 62.3% lower than the industry average of 30.31%.

On the other hand, the stock’s trailing-12-month cash per share of $11.27 is 419.5% higher than the industry average of $2.17. Additionally, its trailing-12-month levered FCF margin of 8.83% is 48.7% higher than the industry average of 5.94%.

Stretched Valuation

In terms of forward Price/Sales multiple, BA’s 1.62 is 12.8% higher than the industry average of 1.43x. The stock’s forward EV/EBITDA ratio of 142.33 is significantly higher than the industry average of 11.88. Furthermore, its forward Price/Cash Flow multiple of 22.70 is 61.3% higher than the 14.07x industry average.

POWR Ratings Exhibit Uncertainty

BA’s fundamentals are reflected in its POWR Ratings. The stock has an overall rating of C, translating to Neutral in our proprietary rating system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. BA has a C grade for Sentiment, justified by its mixed analyst estimates for the fiscal year that ended in December 2023. Likewise, the stock’s C grade for Quality is in sync with its mixed profitability metrics.

In the Air/Defense Services industry, BA is ranked #48 out of the 72 stocks.    

Beyond what we’ve stated above, we have also rated the stock for Growth, Value, Momentum, and Stability. Get all ratings of BA here. 

Bottom Line

Despite BA's promising long-term potential demonstrated by its robust aircraft delivery figures and the CEO’s optimism, recent safety concerns have led to a decline in investor confidence, as evidenced by the company's falling share price. Moreover, the temporary grounding of BA's 737 Max 9 jets may have adverse implications for its future performance.

In addition to the aforementioned reasons, the company’s mixed fundamentals and stretched valuation further contribute to the uncertainty. In light of these factors, as the company gears up to announce its fourth-quarter results tomorrow, it might be best to consider waiting for a more ideal entry point for investing in the stock.

How Does The Boeing Company (BA) Stack Up Against Its Peers?   

While BA has an overall grade of C, equating to a Neutral rating, you may also check out these other stocks within the Air/Defense Services industry: Willis Lease Finance Corporation (WLFC), Textron Inc. (TXT), and Brady Corporation (BRC), carrying A (Strong Buy) ratings. To explore more Air/Defense Services stocks, click here.          

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BA shares were trading at $200.20 per share on Tuesday afternoon, down $4.99 (-2.43%). Year-to-date, BA has declined -23.19%, versus a 3.14% rise in the benchmark S&P 500 index during the same period.

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