How Should an Investor Play Boeing Stock After Q1 Earnings Beat?

The Boeing Company BA recently delivered impressive first-quarter 2025 results, wherein both its top and bottom lines surpassed the respective Zacks Consensus Estimate. Both the metrics improved on a year-over-year basis. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

The year-over-year appreciation can be attributed to the company’s improved operational performance and commercial delivery volume, along with solid revenue growth at its Global Services business. The jet giant ended the first quarter with an operating cash outflow of $1.62 billion, which declined significantly from the year-ago quarter’s reported number of $3.36 billion. Free cash outflow also reduced year over year. 

Such an impressive operational result might encourage investors to add this aerospace stock to their portfolio right away. However, a prudent investor knows that a significant decision like buying a stock should not depend on a company’s single quarterly performance alone. Instead, one should be mindful of its performance over the past year in terms of share price return, long-term prospects as well as risks (if any) to investing in the same. We have provided a detailed discussion on this, as one can see below.

Boeing Lags Industry, Sector & S&P500

Boeing’s shares have gained 2.5% over the past year, underperforming the Zacks aerospace-defense industry’s growth of 3.4%. The stock has also lagged the broader Zacks Aerospace sector’s return of 7.8% as well as the S&P 500’s surge of 8.2% in the said time frame.

The company's one-year price return also came in below that of another key aerospace stock, Embraer ERJ, but beat its arch-rival, Airbus Group EADSY. Notably, shares of Embraer have surged 71.7% over the past year, while those of Airbus have lost 3.3%.

What Caused BA Stock to Tumble?

Boeing has been suffering significantly at the bourses in recent times due to multiple factors that led to its dismal performance over the past few quarters, excluding the first quarter of 2025. This, in turn, must have hurt investors’ confidence in this stock, as evident from its deteriorating one-year share price return. While product quality issues for some of BA’s major commercial jet programs like 737 and 787 have been a prime growth inhibitor lately, the IAM work stoppage added to the American jet maker’s woes by the end of 2024. 

In particular, the work stoppage further delayed the company’s earlier estimated timeline for increasing the production rate for a handful of its significant programs and entry of programs like 777X, 737-7 and 737-10 into service. This delay is likely to increase Boeing’s inventory and storage costs, in addition to hindering its revenue growth prospects in the near term. This, in turn, may add to investors’ concerns.

What Lies Ahead for BA Stock?

Although Boeing faced quite a few adversities in the commercial aerospace industry in the recent past, its future seems bright both in terms of commercial jet delivery and the aftermarket aircraft service industry. Notably, 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 Boeing.

The outlook for the aerospace giant’s defense business also remains optimistic. In the first quarter of 2025, its defense unit secured key contract awards worth $4 billion, resulting in a solid backlog of $62 billion for this segment as of March 31, 2025. 

Such solid backlog counts boost revenue growth prospects for Boeing, thereby bolstering its bottom-line performance. 

In line with this, the consensus estimate for BA’s long-term (three-to-five years) earnings growth rate is pegged at 17.9%, higher than the industry’s 10.8%. 

A quick sneak peek at the company’s upcoming estimates also mirrors similar growth prospects.

Estimates for Boeing

The Zacks Consensus Estimate for second-quarter 2025 sales suggests an improvement of 20.1% from the year-ago quarter’s reported figure, while that for earnings indicates a significant year-over-year increase. A similar improvement trend can be observed in its 2025 estimates. 

The bottom-line estimate for second-quarter and full-year 2025 suggests an upward movement over the past 60 days. This indicates analysts’ gaining confidence in the stock’s earnings generation capabilities.

Risks to Consider Before Choosing Boeing

While Boeing offers strong growth prospects, it continues to face significant challenges, particularly in the commercial aerospace industry, that could affect its operational performance. Investors should carefully consider this before investing in the stock. A notable concern is the persistent supply-chain issues, particularly arising from a shortage of aircraft parts, which, to date, continues to affect the global aviation industry. This, in turn, may affect Boeing.

Looking ahead, the International Air Transport Association’s December 2024 outlook suggests a 21.4% decline in the number of aircraft deliveries projected for 2025 (from its earlier expectation), with persisting supply-chain issues playing the role of a primary growth inhibitor. Fewer jet deliveries imply lower demand for Boeing-built aircraft, which may affect the revenue generation prospects for its commercial airplane business. 

BA Stock’s Dismal ROIC

As evident from the image, the stock’s trailing 12-month return on invested capital (ROIC) not only lags the industry but also reflects a negative figure. This indicates that the company's investments are not generating sufficient returns to cover its costs.

On the contrary, both Airbus and Embraer’s ROIC came in higher than that of the industry.

Should You Invest in BA Stock Now?

To conclude, investors interested in Boeing should wait for a better entry point, considering the stock’s poor ROIC and dismal performance at the bourses. BA currently has a VGM Score of F, which is also not a very favorable indicator of strong performance. 

However, those who already own this Zacks Rank #3 (Hold) stock may continue to do so, considering its solid growth potential in 2025, which is corroborated by the solid year-over-year improvement suggested by its top and bottom-line estimates.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 

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

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