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What To Know About Boeing's Q1 Earnings Miss, 737 And Buyback Update

What To Know About Boeing's Q1 Earnings Miss, 737 And Buyback Update

Boeing Co (NYSE: BA) gained 1 percent Wednesday morning after the company reported first-quarter results and management provided multiple updates related to its business.

Earnings, Guidance Updates

Boeing said it earned $3.16 per share in the first quarter on revenue of $22.917 billion, which represents a miss on the top and bottom lines. Cash flow fell from $3.1 billion in the same quarter last year to $2.8 billion due to lower deliveries of 737 Air Max planes. Net earnings for the quarter fell 13 percent year-over-year to $2.149 billion and the company paid $1.2 billion in dividends.

The aircraft maker said it ended the quarter with a total backlog of $487 billion, including more than 5,600 commercial airplanes.

Boeing's management said it can no longer offer 2019 guidance due to the "uncertainty of the timing and conditions" relating to the 737 Max fleet after the plane was involved in two fatal crashes. The company plans on issuing new guidance "at a future date."

In addition, the company will pause its ongoing stock buyback program due to uncertainty related to the 737 Max.

737 Max Update

Boeing said it's "making steady progress" towards a final certification for a software update to be used in 737 Max planes. The company has already completed 135 test and production flights of the software update.

Boeing is also working closely with regulatory bodies across the world and airplane partners to "comprehensively test the software and finalize a robust package" of training and other resources.

Meanwhile, the grounding of 737 Max planes will cost the company more than $1 billion initially. The Wall Street Journal reported analysts are expecting the financial impact to Boeing to be as much as $3 billion, including compensation to families of passengers killed and penalties to airlines and suppliers.

Sources close to the matter told Reuters Boeing told some of its 737 Max customers it expects the FDA to approve its software fixes as early as the third week of May.

Pro: Buy Any Pullback

Strategic Wealth Partners Mark Tepper told CNBC ahead of the print investors should take advantage of any near-term weakness in Boeing's stock. He said Boeing's "strong growth story" remains unchanged which makes it a "long-term play."

Boeing boasts a "dominant position" in the airplane space and despite concerning 737 Max headlines, it is unlikely airlines are going to start switching to rival Airbus, he said. The company isn't fully exposed to the commercial airline space as 20 percent of its business mix is exposed to the defense sector.

"This is a stock we want to hold," he said.

Boeing's stock traded around $379 per share at time of publication.

Related Links:

Boeing Announces 737 MAX Software Update; Feinseth Says To Buy Weakness In Jet Manufacturer's Stock

With 737s Grounded, Raymond James Goes On Standby With Southwest Airlines


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