Should You Buy, Hold or Sell Boeing Stock Before Q1 Earnings Release?

The Boeing Company BA is scheduled to release first-quarter 2025 results on April 23, 2025, before market open.  

The Zacks Consensus Estimate for revenues is pegged at $19.29 billion, implying a 16.4% improvement from the year-ago quarter's reported figure. The consensus mark for earnings is pegged at a loss of $1.54 per share, suggesting a deterioration from a loss of $1.13 in the prior-year quarter. The bottom-line estimate declined significantly in the past 60 days.  (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Boeing’s earnings missed the Zacks Consensus Estimate in three of the trailing four quarters and beat the same in one, the average negative surprise being 31.31%.

Earnings Whispers

Our proven model predicts an earnings beat for Boeing this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

BA has a Zacks Rank #3 and an Earnings ESP of +13.08% at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Key Factors to Consider

Solid Expectations From Global Services Business

We remain optimistic about Boeing Global Services’ (“BGS”) top-line performance in the first quarter. Steadily increasing global commercial air travel must have bolstered fleet utilization, thereby boosting commercial jet services sales volume.

Higher commercial services revenues, along with solid operating margins expected from government service businesses, are also likely to have boosted the BGS unit’s earnings from operations in the soon-to-be-reported quarter. 

The Zacks Consensus Estimate for the unit’s revenues is pegged at $5,350.7 million, indicating an improvement of 6.1% from the year-ago quarter’s reported number. The consensus mark for earnings is pinned at $1,075.3 million, indicating solid growth of 17.4% year over year.

Will Impressive Commercial & Defense Deliveries Boost Q1 Results?

Boeing’s first-quarter deliveries reflect a 56.6% improvement in commercial shipments from the year-ago quarter’s reported figure. Also, defense shipments surged 85.7% year over year.

Successful deliveries of finished products play a crucial role in boosting revenue growth for manufacturing companies like Boeing.

So, the top-line results from both of Boeing’s commercial and defense business segments are expected to benefit from a year-over-year improvement in delivery figures. However, unfavorable cumulative contract catch-up adjustments on major fixed-price defense development programs might have had an adverse impact on BA’s defense unit’s quarterly revenues. 

The consensus estimate for Boeing’s commercial airplanes business segment’s top line is pegged at $7,464.9 million, implying a 60.4% surge from the year-ago quarter’s reported figure. The Zacks Consensus Estimate for the defense unit’s revenues is pegged at $6,533.4 million, indicating a decline of 6% year over year.

Overall Picture

Considering that Boeing’s global services and commercial revenues accounted for almost 65% of its total revenues as of 2024-end, the notable revenue growth expectation from these two units is likely to have bolstered the company’s overall first-quarter top-line performance. This might have outweighed the negative revenue growth projection from the defense unit.

On the bottom-line front, solid revenue expectations must have bolstered Boeing’s first-quarter earnings. However, reach-forward losses from the 777X and 767 jet programs, lower margins caused by production disruption due to the labor strike that ended in November 2024, and higher research and development expenses, as well as fixed-price development cost pressures associated with the KC-46A and T-7A programs, are likely to have hurt BA’s quarterly earnings.

Price Performance & Valuation

Boeing’s shares have exhibited a downward trend, losing a notable percentage over the past year. Specifically, the stock has plunged 6.6% in the past year, underperforming the Zacks aerospace-defense industry’s growth of 3.7%.

BA’s One-Year Performance

On the contrary, other notable stocks from the same industry have outperformed BA. Shares of Embraer ERJ and Leidos Holdings LDOS have rallied 73.3% and 7.4%, respectively, over the past year.  

From a valuation perspective, Boeing is trading at a discount compared to its industry. Currently, BA is trading at 1.36X forward 12-month price/sales, which is lower than the industry’s forward price/sales multiple of 1.87X. The stock is also trading lower than its five-year median of 1.38.

Price-to-Sales (forward 12 Months)

Like Boeing, its industry peers are also currently trading at a discount. While the forward 12-month price/sales multiple for Embraer is 1, the same for Leidos Holdings is 1.03.

Investment Thesis

The steadily rising demand for air travel and the replacement of aging fleets are expected to drive the need for new jets and aftermarket services, serving as key growth drivers for aircraft manufacturers like Boeing and Embraer.

However, although the commercial aerospace market has been benefiting from steady growth in air travel in recent times, persistent supply-chain issues, particularly those arising from a shortage of aircraft parts, continue to affect the global aviation industry. This, in turn, poses a significant risk for aerospace sector players, such as Boeing, Embraer and Leidos Holdings.

Moreover, persistent supply-chain challenges, along with the resultant pre-tax charges associated with the IAM work stoppage, might have elevated BA’s leverage. This is evident from its higher long-term debt-to-capital ratio compared to its industry.

BA’s Long-Term Debt-to-Capital

Should You Buy or Sell BA?

Boeing is less likely to disappoint with its first-quarter results, considering its positive Earnings ESP. However, investors interested in this stock should wait until this Wednesday, taking into account its dismal performance at the bourses, elevated leverage compared to its industry and downward revision in earnings estimate. Nevertheless, those who already own BA may continue to do so, considering its favorable Zacks Rank and discounted valuation.

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This article originally published on Zacks Investment Research (zacks.com).

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