Will Boeing Stock Recover?

Will Boeing Stock Recover? For some of the investors who like established blue-chip companies in comfortable industries, there’s been nothing better than Boeing, which sits in between commercial airline services and Defense Department contracting.

However, that narrative has unraveled over the past year and a half, leading traders to ponder: “should I buy (or sell) Boeing stock?” and “will Boeing stock recover?”

It’s no secret that Boeing stock has been under pressure in past quarters. Is it a buy now? Let’s take a look at some of the numbers and the relevant context to the BA stock patterns that are giving traders heartburn.

Why Did Boeing Stock Fall?

To answer the question of why Boeing has been suffering in the stock market, you have to look at two different lanes – negative numbers over the past year and a half, and more recent declines in BA share price since a high in March of this year.

Tackling the big-picture stuff first, we see that Boeing really got a one-two punch in the form of problems with 737 Max planes, and then a coronavirus pandemic that grounded a lot of air travel due to precautions and general lack of demand. That combined downward pressure led Boeing to lose a staggering 70% of its value since three-year highs were realized.

Why did this hurt Boeing so bad? Analysts argue that Boeing was hardest hit among commercial airlines because of its extensive operations in transatlantic travel to and from the European Union.

Of course, Americans couldn’t go to the EU at all during the darkest days of the Covid-19 pandemic, and obvious limitations crushed airline profits accordingly, with Boeing eventually having to go to the U.S. government cap in hand for a $60 billion rescue bailout.

More recently though, Boeing has fallen from a high of over $250 per share in March down to around $220, with these declines tied to ongoing aircraft problems and uninspiring quarterly numbers. The 737 Max has been found to have problems with its wiring bundling, and then cracks led to an aborted flight and related fallout.  

Are Airlines Requiring Covid Vaccines?

Because it’s too early to expect blanket vaccinations for U.S. populations, American airline carriers are not currently requiring a covid vaccine to fly. However, some high-risk countries may have specific exit and entry rules regarding vaccination.

Also, there are rumors that airlines will eventually require proof of vaccine status as vaccine eligibility extends to all Americans.

Boeing Earnings Snapshot

In order to assess Boeing in terms of earnings per share, the first thing to know is that the company is reporting negative earnings per share, also called “loss per share” on investor fact sheets

As we’ve mentioned in analysis of other companies, reporting negative earnings per share is not good news in general. It’s also typically the pattern of startups and companies that need to heavily invest in research and development to bring products to market. For a blue-chip operational service company to have negative earnings per share is particularly troubling.

Looking at quarter one earnings reported in April, we see GAAP loss per share of $0.92 which represents a year-over-year change from $1.11 this time last year. To broaden this snapshot, the non-GAAP core loss per share was $1.53 against 2020 quarter one losses of $1.70.

The fact that these losses are decreasing over time does point to some measure of hope for Boeing stock as we progress through less damaging economic phases of post-coronavirus activity.

Will Boeing Revenues Go Up?

Generally speaking, BA revenues will go up if the company is able to improve deliveries and drive demand for service. It will also depend on how these ongoing problems with the 737 Max planes are handled (Boeing says 100 planes are affected).

In order to look more closely at revenue trends and answer the above question, it’s best to examine Boeing revenue numbers going back many years. We also have 2021 Q1 revenue reports of $15.2 billion.

Taking a one-year snapshot, BA has a total of $56 billion revenue for this quarter, and the last three quarters of 2020, combined.

By contrast, annual 2020 revenue numbers were around $58 billion with revenues of $76 billion reported in 2019.

Prior to that, Boeing reported annual revenues of $101 billion in 2018, which was a 7.5% increase from 2017. As you can see from declining revenue numbers since then, that was the last annual increase marked for the stock.

Interestingly, though, if you project similar quarterly revenues through the end of the year, that would come to approximately $60 billion, which would indicate that there is hope for Boeing to rise above 2020 annual revenue numbers.

Therefore, some analysts believe Boeing can and will see increased revenue soon. One relevant question is whether seasonal factors apply.

Is Boeing Stock A Good Buy?

The general consensus is that Boeing is not an excellent buy stock at this time. There are so many more compelling stocks that are poised to pop that a legacy name like BA, under the pressures that it faces, is not currently rated as an attractive purchase option. 

Will Boeing Recover?

Some analysts are calling for a “slow, steady recovery” for Boeing as we claw our way out of the current economy and back into something that looks more normal. Then there are also the issues with the aircraft addressed during the April earnings call:

“We are finalizing the plans and documentation with the FAA to outline the process required for operators to return their airplanes to service,” said Boeing President and Chief Executive Officer Dave Calhoun.

“Upon approval by the FAA, we expect the work to take a few days per airplane…. We will complete this same work on airplanes in our inventory. We have also paused deliveries while we address these issues, which will make our April deliveries very light. At this time, we expect to catch up on deliveries over the balance of the year. …We will continue to communicate transparently with our supply chain to ensure readiness and stability.”

All of this suggests that while Boeing may very well recover, most investors who want to purchase the stock will be long-term buy and holders who are looking at annual revenues into the future, and not day traders thinking that their acquisitions will soon skyrocket on the charts.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.