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Boeing Earnings Were Terrible. The Stock Was OK.

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Boeing reported a third-quarter loss of 60 cents a share on sales of $15.3 billion. Wall Street was looking for a loss of 17 cents a shares on sales of $16.5 billion.

Olivier Douliery/AFP via Getty Images

Stock of commercial-aerospace giant Boeing rose in premarket trading after the company reported third-quarter results that missed analysts’ projections. Shares finished the day down, however, because investors don’t see a clear path forward.

Boeing (ticker: BA) stock was up about 0.8% shortly after the numbers were published. S&P 500 futures also were up slightly. By the end of the day, however, Boeing stock closed down 1.5%. The S&P 500 index fell 0.5%, and the Dow Jones Industrial Average closed 0.7% lower.

For the third quarter, Boeing lost 60 cents a share in the quarter on sales of $15.3 billion. Wall Street was looking for a loss of 17 cents a share on sales of $16.5 billion.

The loss, frankly, isn’t that big a deal. Boeing is still in turnaround mode after a couple of difficult years due to the 737 MAX grounding and Covid-19 pandemic. Earnings have been volatile and way below prior periods.

Don’t forget that Boeing delivered a surprise second-quarter profit, earning 40 cents a share. Back then, Wall Street projected a loss of 82 cents a share. And back in the third quarter of 2018—before the MAX and pandemic—Boeing earned $4.07 a share.

Quarterly reports won’t stabilize until Boeing delivers its backlog of 737 jets produced while the plane was grounded, and until Covid-19 is subdued.

CEO Dave Calhoun hit on the themes of stability and turnaround in the company’s news release: “We are driving stability across our operations, investing in our future and positioning our teams to deliver for our customers as the market recovers,” adding, that “commercial market demand continues to gain traction with broad-based vaccine distribution and border protocols beginning to open.”

Boeing delivered 85 jets in the third quarter, up from 79 jets delivered in the second quarter of 2021. Of the 85 delivered in the quarter, 66 were 737 MAX jets.

There is some improvement, but stock overhangs still remain, wrote Vertical Research Partners analyst Rob Stallard in a Wednesday note reacting to earnings. “We still have limited assurance on when the 787 will be cleared by the FAA,” added Stallard. The 787 isn’t being delivered while Boeing fixes quality issues.

The overhangs, and not current earnings, is why the stock is languishing. Between second- and third-quarter reports, Boeing stock was down about 6%. That dip is despite a 4% jump the day earnings were reported on July 28. The S&P 500 has risen about 4% over the same span. Shares of aerospace-and-defense peer Airbus (AIR.France) fell about 3% in that time frame.

Covid-19 continues to be an issue for all aerospace investors. The Delta variant slowed the pace of improvement in commercial air travel. Although travel continues to improve. U.S. air travel in the third quarter was down 22% compared with pre-pandemic 2019. In the second quarter, that comparison was down 33%.

International travel is rebounding as well. In the third quarter, Visa (V) cross-border transaction volume—a proxy for international travel—was down 14 percentage points compared with 2019. Cross-border transaction volume was down 18 percentage points in the second quarter this year.

Boeing management hosted a conference call at 10:30 a.m. Eastern time to discuss results. On that call, analysts focused on free cash flow, demand, and the pace of deliveries. In other words, the Street is still focused on how the company will dig out of its recent woes. Boeing stock, down 3.5% for the year to date, won’t take off until there’s a clear path forward.

Write to Al Root at [email protected]