- Analysts estimate adjusted EPS of -$0.28 vs. -$15.25 in Q4 FY 2020.
- Commercial airplane deliveries are expected to rise YOY.
- Revenue is expected to rise as demand for commercial airplanes continues to recover.
Boeing Co. (BA) has seen a sharp recovery in its revenue and commercial airplane deliveries in recent quarters after two years of declines due to the COVID-19 pandemic, the grounding of the 737 MAX jet, and investigations into quality problems at the company. By contrast, Boeing has struggled to make a profit. The company has posted a loss in seven of the past eight quarters.
Investors will be closely watching the pace of Boeing's recovery when the company reports earnings on Jan. 26, 2022 for Q4 FY 2021. Analysts expect the company to report a second straight adjusted loss per share as revenue expands for the third straight quarter.
Investors will also focus on Boeing's commercial airplane deliveries, a key metric that measures the level of demand for one of the company's main products. Analysts expect robust growth in deliveries and the fourth consecutive quarter of growth after a long streak of quarterly declines. Despite that, analysts expect total deliveries to be below their levels prior to the start of the pandemic and before the grounding in early 2019 of the 737 MAX aircraft following its involvement in two fatal crashes.
Shares of Boeing have underperformed the broader market over the past year. The stock had been performing for most of the first half of the past year, but began to lag starting around mid-July 2021. Since then, its movement has been volatile and its performance gap compared to the broader market has generally worsened. Boeing's shares have provided a total return of 0.4% over the past year, below the S&P 500's total return of 14.4%.
Boeing Earnings History
Boeing reported Q3 FY 2021 earnings that missed analysts' expectations. The company posted its seventh adjusted loss per share in the past eight quarters. Revenue rose 8.1% compared to the year-ago quarter, marking the second straight quarter of revenue growth after a long streak of declines going back at least to the first quarter of FY 2019. Boeing said its revenue was driven by higher commercial airplanes and services volume.
In Q2 FY 2021, Boeing surpassed analysts' consensus earnings and revenue estimates. The company reported its first positive adjusted earnings per share (EPS) since Q3 FY 2019, ending a streak of six straight adjusted losses per share. Revenue rose 44.0% year over year (YOY), marking the first revenue increase out of any quarter in at least the past two and a half years. Higher commercial airplanes and services volume drove revenue during the quarter.
Analysts expect another adjusted loss per share in Q4 FY 2021, which would be the second straight adjusted loss per share and the eighth in the past nine quarters. Revenue is forecast to rise 11.5% compared to the year-ago quarter, marking the third consecutive quarter of expanding revenue. For full-year FY 2021, analysts expect an adjusted loss per share of $1.98, a significant improvement from the adjusted loss per share of $23.25 posted in FY 2020. Annual revenue is expected to rise 11.0%, which would end the two-year streak of revenue declines.
|Boeing Key Stats|
|Estimate for Q4 FY 2021||Q4 FY 2020||Q4 FY 2019|
|Adjusted Earnings Per Share ($)||-0.28||-15.25||-2.33|
|Commercial Airplane Deliveries||104.4||59.0||79.0|
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, 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, mentioned above, and subsequent electrical issues, have also impacted demand. But the 737 MAX has returned to service. Deliveries of Boeing's 787 Dreamliner have been halted and are likely to remain frozen until about April as U.S. regulators review production flaws with the aircraft. Supply chain issues, including labor shortages, are also hurting Boeing and other aircraft manufacturers. It should also be noted that commercial airplane deliveries is a lagging indicator of demand since it is based on past, rather than current orders for aircraft.
In FY 2018, Boeing delivered a total of 806 commercial aircraft, up 5.6% from the previous year. But in FY 2019, which was impacted by the grounding of the 737 MAX, the company's commercial airplane deliveries fell 52.9%. Then in the following year, FY 2020, deliveries sank another 58.7% amid the collapse in demand triggered by the pandemic. Commercial airplane deliveries began to rise again in the first quarter of FY 2021, up 54.0% YOY. That pace of growth accelerated to 295.0% YOY in the second quarter. Deliveries continued to expand in Q3 but at a slower pace of 203.6% YOY compared to the previous quarter. In Q4 FY 2021, analysts expect commercial airplane deliveries to rise 76.9% YOY. For full-year FY 2021, analysts forecast annual deliveries to increase 120.2%. But total deliveries, at approximately 346 total aircraft, would still be less than half of what they were in FY 2018.
Visible Alpha. "Financial Data."
Boeing Co. "Boeing to Release Fourth-Quarter Results on January 26."
The Wall Street Journal. "U.S. Grounds Boeing 737 MAX Jets."
Boeing Co. "Boeing Reports Third-Quarter Results," Page 1.
Boeing Co. "Boeing Reports Second-Quarter Results," Page 1.