To The Moon

$Boeing(BA)$ will be reporting its fourth-quarter 2024 results on 28 Jan 2025 before the market opens. Boeing have been facing issues such as a labor strike, delivery delays, job cuts and continued challenges within the defense business, these will continue to impact its earnings for 2024, and this might spill over to 2025.

In the most recent quarter, BA has lost roughly $4 billion when it was hit by a debilitating strike, suffered mounting losses in troubled U.S. government projects and incurred costs tied to sweeping job cuts rolled out at the end of the year.

Analyst is expecting BA to report a loss of $2.54 earnings per share for Q4 2024, the contributing factors are the sweeping job cuts and mounting losses in troubled U.S. government projects.

Boeing (BA) Rose Over 10% Despite A Negative Last Earnings Call Sentiment

BA has gained 10.12% since its last reporting earnings call on 23 Oct 2024, though the earnings call sentiment was negative, as it reflects significant challenges faced by Boeing, including financial losses, cash flow issues, and ongoing impacts from a labor strike. Market seems to have the confidence hold up for this aircraft maker.

While there are strong future demand indicators and some segments performing well, the immediate financial and operational hurdles weigh heavily on the company's short-term outlook.

Boeing (BA) Guidance To Focus On Maintaining Cash Reserve

During Boeing's Q3 2024 earnings call, the executives outlined several key financial metrics and strategic priorities. The company reported a revenue of $17.8 billion, which was down 1% year-over-year, and a core loss per share of $10.44 due to the IAM work stoppage and charges on certain programs.

Free cash flow was a negative $2 billion, influenced by lower commercial widebody deliveries and unfavorable working capital timing. Boeing Commercial Airplanes delivered 116 airplanes, generating $7.4 billion in revenue with an operating margin of -54%. The backlog ended at $428 billion with over 5,400 airplanes. Boeing Defense & Space recorded $5.5 billion in revenue and a backlog of $62 billion.

The executives also discussed plans to stabilize the business by resolving the IAM strike, improving execution discipline, and ensuring a robust supply chain to support a production ramp-up. Additionally, Boeing is focused on maintaining a $10 billion cash reserve and prioritizing its investment-grade credit rating while managing debt maturities and considering potential equity offerings to strengthen the balance sheet.

Boeing (BA) Investors Still Gaining Despite Challenges That Might Derail Earnings

For the last three months, BA investors are still gaining more than 15% despite the challenges in the quarter, this show that investors are still confident on BA future.

This could be due to boeing's strong backlog which is roughly $0.5 trillion with strong demand for its products, indicating robust future opportunities.

Boeing global services performance continues to perform well, with $6 billion in orders and a backlog of $20 billion. Revenue was up 2%, and operating margin increased by 70 basis points to 17%.

But as investors, we need to understand and be aware of the headwinds that BA is undergoing now so that we can better position ourselves.

Factors That Might Marred BA Earnings For Reporting Quarter

Larger Negative Cash Flow Expected For 2024

In the last reported quarter, BA has a total company revenue down 1% to $17.8 billion, with a core loss per share of $10.44. Free cash flow was a negative $2 billion, with expectations of continued negative cash flow into 2025. This situation might continue with a larger negative cash flow ending 2024.

Work Stoppage Impacted By IAM Strike

The work stoppage caused by the IAM strike might produced a afterwards impact which would continue to impact production and delivery, particularly in commercial widebody deliveries, and is expected to prolong supply chain disruptions. This might continue into at least the first quarter of 2025.

Negative Operating Margins In Defense and Space Segment

In Q3 2024, BDS recognized $2 billion in pretax charges, with ongoing issues in fixed-price contracts like T-7A and KC-46A resulting in negative operating margins of -43.1%. The challenges with the new administration, BA might still faced the fixed-price contracts issues as there is an ongoing cost cutting to review the previous administration spending.

Commercial Program Setbacks

The 777X program faced a $2.6 billion pretax charge, with first delivery delayed to 2026. The 737 program's progress towards a 38-per-month production rate is delayed.

Technical Analysis - Multi-timeframe (MTF)

If we looked at the technical on how BA is trading, it seems like last week, the bulls have successfully exit the short-term MA, and making a nice upside movement, this could be seen from the bullish MACD crossover last week.

Though MTF did not show a clear upward trend, but I think investor sentiment might continue as a less-than-expected earnings would be anticipated, but overall, BA might be able to turn things around if the trump administration focus its attention back to the american airlines business.

Summary

I would not be thinking of buying into BA now, as the strike impact might continue its production and the recent airlines incidents towards the end of 2024 would cause BA to spend more to improve their technology or in the investigations.

I would suggest we continue to monitor this stock as the negative cash flow is an issue for a capital intensive aircraft building company.

Appreciate if you could share your thoughts in the comment section whether you think BA would surprise us with a smaller negative cash flow in the Q4 2024 earnings report.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.