Boeing Co BA on Wednesday released its Q4 2015 earnings, beating analysts' expectations on many fronts. While revenue was down compared to Q4 2014, it came in ahead of expectations (est. $23.40 billion, actual $23.60 billion). Boeing also beat analysts' consensus estimates for EPS (est. $1.27, actual $1.60).
However, the outlook for Boeing may not be overtly cheery. Following the report and "the precipitous stock decline," Buckingham Research Group has published an investment update warning investors of potential lackluster performance on the horizon.
Underperform Rating, $108 PT
"Clearly, the market reaction and stock decline was due to the expected downward revisions to investor and consensus estimates as a result of the lower than expected 2016 EPS and cash flow guide," Buckingham analyst Richard Safran began, addressing the recent stock's movement.
According to the report, the earnings call highlighted a few concerns for Buckingham, including a "tangential" cash flow story and the surprise impact the 737 MAX introduction had ("to us – and to investors").
Looking forward, the research firm anticipates capital deployment as playing a large part in the Boeing story, "We think many investors and consensus expect BA to repurchase the $14 billion of its stock in about 2-yrs. If slowing advances and lower than expected cash flow drive BA to repurchase its stock closer to 3-yrs, we think that could be a disappointment."
The Bottom Line
Citing future EPS uncertainty and cash flow estimates issues, in addition to the concerns above, the firm concluded that the stock is likely to trade flat to down in the foreseeable future.
At time of publication, Boeing was trading down 1.29 percent at $115.10.
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