Morningstar

Boeing Earnings: Turnaround Underway With Cash Flows Improving

We have revised up our fair value estimate of Boeing stock.

The logo for Boeing appears on a screen above a trading post on the floor of the New York Stock Exchange
Richard Drew
Securities in This Article
Boeing Co
(BA)

Key Morningstar Metrics for Boeing

What We Thought of Boeing’s Earnings

Boeing BA delivered 104 737 MAX and 24 787 jets in the second quarter, progressing toward its respective goals of delivering around 400 and 80 of its most popular aircraft in 2025. Defense recorded small operating profit and no charges, while services contributed nearly $1 billion in operating profit.

Why it matters: The most important metric we are monitoring on Boeing’s path to recovery is the rate at which it is building and delivering 737 and 787 jets. Secondarily, we would hope to see no further charges in the defense business, and we very much expect the services business to maintain its solid contribution to profit and cash flow.

  • CEO Kelly Ortberg indicated that all but one of the key performance indicators the company and the Federal Aviation Administration are monitoring on the 737 assembly line to ascertain when production rates will be deemed stable and repeatable enough to begin increasing output are in the green.
  • The remaining indicator relates to the number of hours spent working on manufacturing steps out of the normal sequence. We are cautiously optimistic the company will tackle this metric within the year and begin upping 737 production by 2026.

The bottom line: We have tuned our 2025 forecasts to account for recent progress and revised our fair value estimate from $242 to $249 per share for wide-moat Boeing. The shares have regained some ground lately and trade about 8% below our updated fair value estimate.

  • Our forecast for 2025 deliveries of 737s is 34 more planes than the company’s stated guidance of 400, and we estimate the company may deliver 11 more 787s than its goal of 80. If the end result lies somewhere in between, it will still be a positive development on the company’s turnaround trajectory.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

This article was generated with the help of automation and reviewed by Morningstar editors. Learn more about Morningstar’s use of automation.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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