Boeing Had A 'Good Quarter,' Investor Says: But Shares Spiraled - What Happened?

Zinger Key Points
  • Boeing shares are down nearly 10% on weak earnings, but Cerity Partners' Jim Lebenthal says the quarter was good.
  • "The bottom line is this: deliveries are picking up, production is picking up, orders are picking up and cash flow is picking up," he says.
Boeing Had A 'Good Quarter,' Investor Says: But Shares Spiraled - What Happened?

Turbulence in Boeing Co. BA shares rocked long-term investors' portfolios Wednesday, but Cerity Partners' Jim Lebenthal expects the pullback to be short-lived. 

The Arlington, Virginia-based company reported a huge bottom-line miss and softened its outlook for 737 MAX production due to lingering supply chain constraints and a standstill on China deliveries Wednesday, which sent shares spiraling lower.

Although he acknowledged that the earnings results were poor, investors are looking at the wrong metrics, Lebenthal said Wednesday on CNBC's "Fast Money Halftime Report."

See Also: Boeing's Defense Business Hit By $2.8B Losses, Expects Positive Free Cash Flow For FY22

"This was a good quarter. I mean, make no mistake about it. The thing is not so much the earnings, it's the free cash flow," he said.

Boeing ended the quarter with more than $2.9 billion in free cash flow, which is up from negative cash flow of more than 500 million in the prior year's quarter, according to Benzinga Pro.

Street expectations were for approximately $1 billion in free cash flow, Lebenthal said: "That's a huge beat. They're going to be free cash flow positive again next quarter."

Analysts have knocked Boeing in recent years for accumulating debt, so turning free cash flow positive is a big inflection point for the company, he said. 

Lebenthal expects Boeing to continue paying down its debt and eventually start returning cash to shareholders again. 

"The bottom line is this: deliveries are picking up, production is picking up, orders are picking up and cash flow is picking up. That's exactly what you want to see at this point in a turnaround," he said.

Related Link: Boeing's Defense Business Hit By $2.8B Losses, Expects Positive Free Cash Flow For FY22

Lebenthal noted that Boeing shares had gained about 25% over the last month heading into earnings, so some of the selling could be profit-taking

"Today's decline is temporary. This turnaround is well on track," Lebenthal said.

BA Price Action: Boeing has a 52-week high of $229.67 and a 52-week low of $113.02.

The stock was down 9.24% at $133.09 Wednesday afternoon, according to Benzinga Pro.

Photo: courtesy of Boeing.

Posted In: CNBCJim LebenthalEarningsLong IdeasNewsTrading Ideas