Aerospace giant Boeing (NYSE: BA) reported its financial results for Q3 2024, delivering mixed news for investors. While the company met Wall Street’s revenue expectations with $17.84 billion in sales, this figure reflects a 1.5% decline year-over-year. Boeing’s adjusted earnings per share (EPS) stood at a significant loss of $10.44, falling short of analysts’ expectations by 18.3%.
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Boeing (BA) Q3 2024 Performance Highlights:
- Revenue: $17.84 billion, slightly below the $17.94 billion expected by analysts.
- Adjusted EPS: -$10.44, missing the forecast of -$8.82.
- Operating Loss (EBITDA): $5.01 billion, worse than the expected loss of $4.01 billion, marking a 24.8% miss.
- Gross Margin (GAAP): -19.7%, down from 8.8% last year.
- Free Cash Flow: -$1.96 billion, compared to -$310 million last year.
- Sales Volume: Up 10.5% year-over-year, showing resilience despite a challenging quarter.
- Market Cap: $98.51 billion.
Boeing’s new CEO, Kelly Ortberg, emphasized the need for the company to refocus on its core operations amid its challenges, including a more than five-week work stoppage involving over 32,000 machinists. The labor strike may end soon as machinists are expected to vote on a new contract proposal.
Company Overview:
Boeing, one of the leading players in the commercial aircraft industry, develops and manufactures defense systems, commercial airplanes, and space products. As part of the aerospace duopoly, Boeing faces pressures from both economic cycles and geopolitical tensions, which can greatly impact its performance.
Sales and Growth Trends:
Over the last five years, Boeing’s sales have declined by an average of 3.4% annually. However, recent demand for Boeing’s products has increased, as evidenced by its 9.2% annualized revenue growth over the past two years. This signals that Boeing’s demand has accelerated, driven by newer product offerings and services. While revenue dipped 1.5% year-over-year this quarter, analysts are optimistic, forecasting a robust 14.8% revenue growth over the next 12 months.
Operating Margin and Profitability:
Operating margin is a key metric of a company’s profitability, and Boeing has struggled this quarter. Its operating margin dropped to negative 32.3%, a sharp decline of 27.8 percentage points from the previous year. This reflects a decrease in operational efficiency as costs rose relative to revenue.
Earnings Per Share (EPS):
Boeing’s EPS has faced a steep decline, shrinking 40.6% annually over the past five years. However, its operating margin has shown improvement during the same period, suggesting that external factors, like shareholder dilution (which increased by 8.7%), have negatively impacted earnings. Despite the challenging quarter, Wall Street analysts remain optimistic, predicting that Boeing’s full-year EPS will improve from a projected -$14.94 to a positive $0.68 next year.
Takeaways from Boeing’s Q3 Results:
Boeing’s Q3 2024 earnings were underwhelming, with EBITDA and EPS missing expectations. The company continues to face significant headwinds, including labor strikes and rising costs. However, analysts predict an upward revenue trend and improved profitability over the next 12 months, potentially making Boeing a recovery play for long-term investors.
Final Word: While Boeing’s recent quarter was tough, it’s important to keep an eye on its long-term growth potential. The market seems optimistic about Boeing’s future, with sell-side analysts expecting double-digit revenue growth in 2025. Will Boeing make a comeback as a leader in the aerospace industry? Investors will have to watch closely.
