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Boeing (BA) Stock Up Despite Falling Short of Wall Street Expectations in Q3 Earnings

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by Bhushan Akolkar · 2 min read
Boeing (BA) Stock Up Despite Falling Short of Wall Street Expectations in Q3 Earnings
Photo: Boeing Airplanes / Twitter

Boeing announced its Q3 2019 earnings showing dismal performance, and consequently, fell short of the Wall Street expectations. Surprising enough, but Boeing (BA) stock is up 3.5% closing at $340.50 per share.

The stock of Boeing (BA) rallied 3.5% on Wednesday closing at $340.50 after the company announced its Q3 2019 earnings. However, the share price movement is not in accordance with the dismal performance shown by the company as it falls short of the Wall Street expectations by a huge margin.

The Chicago-based airline manufacturer saw a 51% drop in net income. Boeing reported a net income of $1.17 billion in Q3 2019 with the per-share profit shrinking to $1.45 against $2.09 expected by the analysts. Moreover, the total revenue plunged 21% to 9.68 billion while the free-cash-flow was negative at $2.89 billion.

So despite a below-expectation performance, what is causing the stock price to rise? Boeing assured the investors that its most-popular 737 Max aircraft will be returning to service and flying again in the airspace. There was a huge skepticism on Boeing’s ability to recover after two fatal air-crashes of the 737 Max aircraft.

The Boeing 737 Max is the company’s top-selling aircraft and Boeing is confident that it will get the “regulatory approval of the 737 MAX return to service begins in the fourth quarter of 2019.”

Boeing 737 Max Continues Production as Normal

After the two fatal incidents of 737 Max in Indonesia and Ethiopia, investors were skeptical if Boeing will cut down on the production of 737 Max. However, the company has continued with its normal production of 42 airplanes every month. Furthermore, Boeing is also optimistic that its monthly production will go to 57 planes by the end of 2020.

However, we are yet to get the full forecast for this year from the company. Writing to the investors, Credit Suisse analyst Robert Spingarn said: “No incremental negative news on MAX will be a relief for most”.

Boeing’s commercial airplane unit has also seen a major setback during Q3 2019. The commercial division brought $8.3 billion in revenue for Q3 but operating profits dropped were on a sharp decline. This division report $40 million for Q3 against $2 billion in profits a year ago. Boeing thus plans to cut down on the 787 Dreamliner production to 12 planes a month.

On the other hand, the company’s space and defense division saw a 2% increment year-over-year. “We continue to see broad support for our products from the Pentagon, NASA, and Congress,” said Boeing CEO Dennis Muilenburg.

However, all worries for Boeing are yet not over the Federal Aviation Administration continues to seek the right explanation from Boeing over the two major accidents this year.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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