Key Points
Boeing reported a loss ten cents worse than anticipated this morning.
Free cash flow turned positive, however.
With $745 billion in backlog and a new Navy contract in hand, Boeing could turn profitable next year.
Boeing (NYSE:BA) stock tumbled 9.6% through 12:05 p.m. ET after reporting earnings and sales "misses" Tuesday morning.
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Analysts already weren't super optimistic, expecting Boeing to lose $0.24 per share on $24.4 billion in sales, but Boeing still managed to underwhelm on both counts. The aerospace giant lost $0.34 per share in Q3, and its sales came in light at $24.2 billion.
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Boeing Q3 earnings
Boeing's sales grew 4% year over year in Q3 -- half the increase of earlier in the year.
On earnings, the picture was better than the headline numbers reflect. Although Boeing scored a $0.34 per share non-GAAP loss for the quarter, losses as calculated under generally accepted accounting principles (GAAP) were only $0.26 per share -- a much better result than last year's $7.14 per share loss.
Best of all, Boeing grew its cash from operations 33% year over year, to $1.5 billion. Minus $1 billion in capital spending, this left Boeing with positive free cash flow for the quarter -- $500 million. Although the company is still operating at a FCF deficit ($359 million) year-to-date, this number at least is moving in the right direction.
What's next for Boeing stock
Other developments support this view. Boeing noted that the Federal Aviation Administration has certified two more 737 models, the 737-7 and 737-10, for flight, and highlighted the U.S. Navy's recent award of a $20 billion contract to Boeing to develop and build a new stealth fighter jet, the F/A-XX. The company is also growing its backlog, recently hitting a new record of 6,300 commercial airplanes to be built, worth $745 billion at list prices.
Although analysts still don't expect Boeing to earn a profit this year, the prospects for profit in 2027 are looking up. The consensus target: $4.27 per share in earnings -- GAAP.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Boeing. The Motley Fool has a disclosure policy.