Boeing (NYSE: BA) recently reported its Q4 results, with the top and bottom line missing the street estimates. The company reported revenue of $15.2 billion and an adjusted loss of $5.90 per share, compared to the consensus estimates of $16.2 billion in sales and $3.00 loss per share. But, the company’s outlook for 737 production was optimistic, and BA stock rose 1.5% post the results announcement.
BA stock, with -32% returns since the beginning of 2024, has significantly underperformed the S&P 500 index, up 27%. Our take on – What’s In Store For Boeing Stock In 2025? — captures the issues the company faced lately and its impact on BA stock. If you want upside with a smoother ride than an individual stock, consider the High-Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.
How Did Boeing Fare In Q4?
Boeing’s revenue of $15.2 billion in Q4 reflected a 31% y-o-y decline. The company delivered 57 airplanes in Q4, reflecting a 64% y-o-y decline, given the strike at its production unit. Looking at segments, the commercial airplanes segment revenue declined 55% y-o-y. Defense, space, and security revenue was down 20% and global services sales were up 6% during the quarter. The company’s costs continue to rise, and its operating margin plunged to -26.5% during the quarter, versus 0.4% in the prior-year quarter. Lower revenues and a significant decline in margin resulted in the bottom-line plunging to $(5.90) per share, versus $(0.47) per share in the prior-year quarter.
While Q4 was a let-down, Boeing’s management did sound optimistic about the second half of the year. Boeing has finalized the International Association of Machinists and Aerospace Workers agreement and resumed production for its aircraft programs. Although the FAA has currently capped the company’s production at 38 units per month, the company is working with the agency to lift the cap. The FAA conducted an assessment of the company’s safety management system and production processes in the previous quarter. The review yielded positive results, with the FAA noting substantial improvements. Boeing now expects to reach the production target of 38 aircraft per month later this year. This is sooner than we anticipated and it should cheer investors.
What Does This Mean For BA Stock?
BA stock has had a tough few quarters, and the stock has nosedived from levels of over $260 in late 2023 to under $180 now. Even if we look at a slightly longer period, the decrease in BA stock over the last four-year period has been far from consistent, with annual returns being more volatile than the S&P 500. Returns for the stock were -6% in 2021, -5% in 2022, 37% in 2023, and -32% in 2024.
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Given the current uncertain macroeconomic environment around rate cuts and changes in the White House, could BA face a similar situation as it did in 2021 and 2024 and underperform the S&P over the next 12 months — or will it see a recovery? While we will soon update our model for Boeing to reflect the latest results, we think the stock may now have upside, given the optimistic production targets. At its current levels of around $180, BA stock trades at 1.6x trailing revenues, versus the stock’s average P/S ratio of over 1.9x over the last five years. We continue to believe that 2025 will turn out to be a year where Boeing sets a strong path forward, focusing on quality control and improving efficiency. These measures will likely help it start a new cycle where the production targets are higher, FAA likely lifting the cap, and the company returning to profitability over the next year or so.
While BA stock looks like it may see higher levels, it is helpful to see how Boeing’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.
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