- Analysts estimate adjusted EPS of -$1.03 vs. -$1.70 in Q1 FY 2020.
- Commercial airplane deliveries are expected to rise YOY.
- Revenue is expected to fall for the ninth straight quarter amid plunging air travel due to COVID-19 pandemic.
Boeing Co. (BA), already suffering financially from five straight quarters of losses, is now facing new problems with its 737 MAX passenger jet. Airlines have removed dozens of 737 MAX jets from service due to potential electrical problems, a major setback for Boeing. The jet had only recently re-entered service after being grounded in 2019 due to two fatal crashes. The electrical issue could undermine confidence in the jet and compound Boeing's troubles amid the COVID-19 pandemic's adverse impact on global travel.
Investors will be watching to see whether Boeing can limit its losses and a string of revenue declines when the company reports earnings on April 28, 2021 for Q1 FY 2021. Analysts expect Boeing's adjusted loss per share to narrow compared to the year-ago quarter as revenue declines for a ninth consecutive quarter, albeit at a slower pace than in recent quarters.
Investors will also be focusing on Boeing's commercial airplane deliveries, a key metric that provides an indication of the level of demand for one of the company's main products. Analysts are forecasting that the number of commercial airplane deliveries will rise on a year-over-year (YOY) basis for the first time since the final quarter of FY 2018.
Shares of Boeing have been extremely volatile over the past year, but have outperformed the broader market by a significant margin. While the stock is still well below pre-pandemic levels, it reached a recent peak around mid-March. It has trended downward since then, but has maintained its outperformance compared to the rest of the market. Boeing's shares have provided a total return of 87.6% over the past year, well above the S&P 500's total return of 45.5%.
Boeing Earnings History
After nearly two months of downward momentum, Boeing's stock reached a turning point after reporting Q4 FY 2020 earnings. It began to take off days after the report, even though the company posted a major adjusted loss of $15.25 per share, partly due to a $6.5 billion pre-tax charge on the company's 777X program. It was the company's biggest quarterly adjusted loss per share in at least four years and the fifth straight quarterly adjusted loss per share. Revenue fell 14.6%, marking the eighth straight quarter of declining revenue. Financial results continued to be significantly impacted by the pandemic and the grounding of the 737 MAX.
In Q3 FY 2020, Boeing reported an adjusted loss per share of $1.39, the fourth straight quarter of adjusted losses per share. Revenue sunk 29.2%, continuing the streak of declines begun in Q1 FY 2019. Boeing noted that its financial results continued to be adversely impacted by the pandemic and the 737 MAX grounding.
Analysts expect the company's adjusted loss to narrow to $1.03 per share, the smallest loss in its recent loss streak going back to the final quarter of FY 2019. Revenue is forecast to fall 7.1%, which would make it the slowest decline in eight quarters. For full-year FY 2021, analysts expect an adjusted loss per share of $0.43, which would mark the third straight year of annual adjusted losses per share. Revenue is expected to rise 38.9%, which would mark the first increase since FY 2018.
|Boeing Key Stats|
|Estimate for Q1 2021 (FY)||Q1 2020 (FY)||Q1 2019 (FY)|
|Adjusted Earnings Per Share ($)||-1.03||-1.70||3.16|
|Commercial Airplane Deliveries||85||50||149|
Source: Visible Alpha
The Key Metric
As mentioned above, Boeing's commercial airplane deliveries are also a key metric watched by investors. Boeing manufactures both commercial and military aircraft. Demand for the former type is much more sensitive to economic conditions whereas demand for the latter depends on government policy decisions regarding its military program. Historically, sale of commercial airplanes has been Boeing's largest source of revenue, but that has changed recently due to the adverse impact of the pandemic and the grounding of the 737 MAX. In FY 2018, Boeing's Commercial Airplanes segment accounted for about 57% of total revenue. By the end of FY 2020, the segment accounted for just 28% of the total, even as total revenues had shrunk considerably.
Total annual commercial airplane deliveries reached a recent peak in FY 2018, at 806 aircraft. But deliveries have fallen considerably ever since. In FY 2020, Boeing delivered just 157 commercial airplanes, down more than five-fold. In terms of quarterly deliveries, after reaching a peak of 238 in the final quarter of FY 2018, total deliveries fell to a low of 20 in Q2 FY 2020. The final two quarters saw commercial aircraft deliveries pick up to 28 in Q3 and 59 in Q4. For Q1 FY 2021, analysts are expecting total deliveries to rise 69.9%, which would mark the first YOY increase since the final quarter of FY 2018. For full-year FY 2021, analysts are forecasting total deliveries of 512. That would be a significant 225.9% increase from last year, but still well below the peak in FY 2018.
Wall Street Journal. "Boeing 737 MAX Electrical Problem Affects More Locations on Aircraft." Accessed April 26, 2021.
Boeing Co. "Boeing to Release First-Quarter Results on April 28." Accessed April 26, 2021.
Visible Alpha. "Financial Data." Accessed April 26, 2021.
Boeing Co. "Boeing Reports Fourth-Quarter Results," Page 1. Accessed April 26, 2021.
Boeing Co. "Boeing Reports Third-Quarter Results," Page 1. Accessed April 26, 2021.
Boeing Co. "Form 10-K for the fiscal year ended December 31, 2020," Page 27. Accessed April 26, 2021.