Boeing stock jumps with a surprising profit. What do you know about its earnings?

[ad_1]

font size

Boeing 737 Max 10 passenger plane. Eileen Banner-Paul/Getty Images

Commercial aerospace giant Boeing announced a surprise profit for the second quarter of 2021. Stocks, for now, are moving up.

Boeing (stock ticker: BA) reported a profit of 40 cents per share from $17 billion in sales. Wall Street was looking to lose 83 cents on sales of $16.6 billion. According to FactSet, not a single analyst was forecasting quarterly earnings. It’s an amazing result. It’s Boeing’s first positive earnings per share since the third quarter of 2019.

Shares are up 4.8% in early trading Wednesday, while the S&P 500 is down 0.1% and the Dow Jones Industrial Average is down 0.2%.

Baird analyst Peter Armant called it a “horrific blow” in a report on Wednesday. For him, the report is good news for the stock and Arment believes investors will focus on improving their free cash flow forecast. Boeing ran out of about $700 million in cash during the quarter, well below the $2.8 billion forecast on Wall Street. Furthermore, the cash burn in the second quarter was about $3 billion better than the first quarter of 2021.

Arment is Boeing’s bull, buy rated stock and $306 price target.

But Rob Stallard, an analyst at Vertical Research Partners, is not optimistic. He evaluated the stock contract and has a $242 price target for Boeing stock. Stallard described the quarter as “a tactical victory for Boeing, but strategic challenges remain.” He noted in a report on Wednesday that the commercial aircraft division is still losing money and that Boeing has many decisions to make in the next quarter. For example, Boeing needs to decide whether to develop a new single-aisle jet aircraft to compete with the Airbus A220, replace the 737 MAX, or replace the 757 program. There are some directions the company could go. A new aircraft could cost the company up to $15 billion over 10 years.

Despite ongoing challenges, the quarter is a good result given the issues Boeing has been dealing with including Covid-19, grounding and rehabilitation of the 737 MAX as well as 787 quality issues that have halted delivery of those planes.

“We continued to make important progress in the second quarter as we focus on driving stability across our operations and transforming our business for the future,” CEO Dave Calhoun said in a company press release. “While our commercial market environment improves, we are closely monitoring COVID-19 case rates, vaccine distribution and global trade as key indicators of the stability of our industry.”

Profit margins improved compared to the first quarter. In commercial aviation, Boeing delivered 79 aircraft in the second quarter compared to 77 aircraft in the first quarter. Just two more. However, operating losses were reduced from $856 million in the first quarter to $472 million in the second quarter.

Defense division margins rose to 13.9% from 5.6%. Services division margins rose to 13.1% from 11.9%.

Boeing is hosting a conference call at 10:30 a.m. in the East to discuss results The pace of improvement will be on top of the concerns of investors and analysts.

Write to [email protected]

.

[ad_2]