- Analysts estimate adjusted EPS of -$0.11 vs. $0.40 in Q2 FY 2021.
- Commercial airplane deliveries, already announced, rose YOY but missed analyst estimates.
- Revenue is expected to rise modestly as commercial aircraft demand recovers from the impact of the COVID-19 pandemic.
The Boeing Co. (BA) has faced daunting challenges in recent years, many of its own making. The aircraft manufacturer has been plagued by chronic quality problems as well as the continuing fallout from crashes of two 737 MAX jetliners that killed 346 people in 2018 and 2019. Most recently, demand for commercial aircraft plunged early in the COVID-19 pandemic as passenger travel plummeted. And ongoing supply chain issues have led to shortages of semiconductors, engines, and other equipment needed to manufacture planes.
Investors will look to see how Boeing is managing this turbulence when the company reports earnings on July 27, 2022 for Q2 FY 2022. Analysts expect Boeing to post the fifth straight quarter of adjusted losses per share compared with positive earnings per share (EPS) in the prior-year quarter. Analysts also expect modest revenue growth year-over-year (YOY).
Investors also will focus on Boeing's commercial airplane deliveries, a key metric that measures the level of demand for one of the company's main products. Boeing announced its commercial airplane deliveries earlier this month. Deliveries for commercial aircraft rose sharply compared to the year-ago quarter, but came in below analysts' estimates.
Shares of Boeing stock have underperformed the stock market in the last year. Boeing stock zigzagged above and below the market between July and October 2021, but it has underperformed since that time. The shares dropped in February and March 2022 and failed to fully recover, then plunged again in April and May. Since reaching a low point in June, Boeing stock has recovered some of its lost ground. However, as of July 24, it is still well behind the market, with a 1-year trailing total return of -28.4% compared with -9.3% for the S&P 500.
Boeing Earnings History
Boeing's history of quarterly adjusted losses extends back before the start of the COVID-19 pandemic. The company posted annual adjusted losses for three straight fiscal years: 2019, 2020 and 2021. In FY 2019, both Q2 and Q4 saw adjusted losses per share. Losses widened overall during FY 2020 and particularly in Q4 FY 2020 before narrowing in FY 2021. The second quarter of FY 2021 was the only quarter since Q3 FY 2019 that the company reported positive adjusted EPS. Analysts now expect adjusted losses per share of $0.11 in Q2 FY 2022, the narrowest quarterly loss per share in the last three and a half years.
Boeing has reported YOY declines in revenue for 11 of the past 13 quarters. The steepest quarterly plunges took place in Q2 and Q4 FY 2019, prior to the start of the pandemic, but Boeing also posted steep revenue declines in all four quarters of 2020. The only periods when Boeing reported rising revenue is Q2 and Q3 of FY 2021. Now, analysts expect Boeing to report a modest 3.9% increase in revenue in Q2 FY 2022, which would be the only the third quarterly period of growth since the start of FY 2019.
|Source: Visible Alpha; Boeing.|
|Q2 FY 2022||Q2 FY 2021||Q2 FY 2020|
|Adjusted Earnings Per Share ($)||-0.11 (estimate)||0.40||-4.79|
|Revenue ($B)||17.7 (estimate)||17.0||11.8|
|Commercial Airplane Deliveries||121 (actual)||79||20|
Source: Visible Alpha; Boeing.
The Key Metric
As mentioned above, Boeing's commercial airplane deliveries are also a key metric that investors monitor. Boeing manufactures both commercial and military aircraft. Demand for the former type is much more sensitive to economic conditions, and thus much more volatile. Demand for the latter depends on government policy decisions regarding its military program, making it a much more stable source of demand. Demand for Boeing's commercial airplanes has been devastated in recent years by the pandemic's impact on the airline industry. Furthermore, issues with some of the company's key aircraft, including the grounding of the 737 MAX and subsequent electrical issues, have also severely impacted demand. Deliveries of Boeing's 787 Dreamliner have been halted in recent months due to production and regulatory issues as well.
Boeing announced on July 12 that it delivered 121 commercial airplanes for Q2 FY 2022. Although this is behind analysts' estimates of 125 aircraft delivered, it's 58.2% higher than the same quarter a year ago.
Boeing's recent number of annual commercial airplanes delivered is a fraction of the company's volume during the four years between 2015 and 2018, when deliveries ran roughly between 750 and 800 aircraft per year. The figure dropped sharply to 380 in 2019 and even further for FY 2020 in wake of the 737 MAX crashes and other quality issues. In recent years, Boeing has taken steps to fix many of these problems. Now, in Q2 FY 2022, analysts expect Boeing to deliver a total of 553 commercial airplanes in FY 2022, a step toward recovery but still well below historic.
New York Times. "Boeing 737 Max Flies Again, but Crash Victims’ Kin Say Risks Remain."
Bloomberg. "Boeing Sees Slower Growth, Russia Easing Long-Term Jet Demand."
Bloomberg. "Boeing Vows It Won’t Build ‘Gliders’ as Engine Shortage Expands."
The Boeing Co. "Q2 2022 The Boeing Company Earnings Conference Call."
Visible Alpha. "Financial Data."
The Boeing Co. "Boeing Announces Second-Quarter Deliveries."
Financial Times. "Aircraft sales show signs of life after pandemic slump."
CNBC. "Boeing set to resume 737 Max deliveries, airlines start repairs after FAA approves electrical issue fix."
Wall Street Journal. "Boeing Sells Five 787 Dreamliners to Aircraft Lessor in Air Show Boost."