Boeing 737 MAX airplanes sit parked at the company’s production facility in Renton, Washington.
David Ryder/Getty Images
Boeing stock isn’t doing much after the company reported fourth-quarter earnings that missed Wall Street estimates by a mile, and that’s because earnings at Boeing still don’t matter. But free cash flow, delivering 737 MAX jets, fixing the 787 and Covid-19 do matter and dominate the company’s outlook.
Boeing (ticker: BA) stock was up about 0.5% in premarket trading. S&P 500 and Dow Jones Industrial Average futures rose 1.4% and 1%, respectively.
The move for Boeing stock is less than the overall market, but it isn’t bad considering the headline results. Boeing reported a loss of $7.02 a share from $14.8 billion in sales. Wall Street was looking for 29 cents in earnings from $16.7 billion in sales.
Analysts weren’t even close. Forecasting Boeing these days isn’t easy though. A big factor in the huge fourth-quarter loss was a $3.5 billion non-cash accounting charge related to recent 787 manufacturing issues. It’s hard to predict unusual charges.
In addition to 787 issues, Boeing is still working through its inventory of built but undelivered 737 MAX jets. The MAX was grounded worldwide between March 2019 and November 2020 following two deadly crashes inside of five months.
Delivering jets from inventory is one big reason that free cash flow was better than expected. Free cash flow in the fourth quarter amounted to positive $494 million. Analysts projected negative cash flow of almost $1 billion in the quarter.
It was another rocky quarter for Boeing. Defense sales came in at $5.9 billion, while Wall Street was expecting $6.9 billion.
Defense sales, however, still aren’t top of mind for investors with the company in turnaround mode.
“2021 was a rebuilding year for us as we overcame hurdles and reached key milestones across our commercial, defense and services portfolios,” said CEO David Calhoun in the company’s news release. “As the commercial market recovery gained traction, we also generated robust commercial orders, including record freighter sales. Demonstrating progress in our overall recovery, we also returned to generating positive cash flow in the fourth quarter.”
Management hosts a conference call at 10:30 a.m. Eastern time to discuss results. Investors and analysts will want to hear about the ongoing recovery as well as when 787 jets will start to be delivered again. Investors are also waiting for China to re-approve the MAX for commercial service. Management might also make comments about that topic as well.
Coming into Wednesday trading, Boeing stock has gained about 1% year to date. That’s better than the 9% drop in the S&P 500.
Write to Al Root at [email protected]
