Boeing (NYSE: BA) burned through $3.9 billion in cash in the first quarter on its way to posting a substantial loss. But analysts had feared things would be even worse than they were.
Following the release of the company's quarterly results, Boeing shares opened Wednesday's trading session up by 5% and remained in the green by 2.6% as of 10:41 ET.
Terrible, as expected
Boeing's issues are by now well known. The aerospace giant has stumbled from crisis to crisis since the 2019 grounding of its 737 MAX following a pair of fatal crashes. Boeing today faces serious questions about its engineering and manufacturing practices as they relate not just to the MAX, but also the 787 Dreamliner and 777X, and both regulators and customers are cracking down. Investors went into the quarterly report expecting the company to put up massive losses due to delivery holds and compensation to customers for jet groundings.
The company did lose $1.13 per share in Q1 on revenue of $16.6 billion, but that was better than the $1.65 per share loss on sales of $15.22 billion that Wall Street analysts had, on average, expected. Boeing's cash flow for the period was a negative $3.9 billion, nearly $600 million less in burn than the consensus estimate.
In the earnings release, Boeing management said it is "undertaking comprehensive actions in our commercial business to strengthen quality and safety," and noted that the company still had $7.5 billion in cash and marketable securities on its books as of quarter's end.
Is Boeing a buy after its quarterly beat?
The bull case for Boeing rests heavily on the fact that the company has a backlog of more than 5,600 commercial plane orders valued at $529 billion. If Boeing can deliver on those orders and pay down its $47.9 billion in debt, there is a clear path for the stock to rise from here.
The question is how soon will those deliveries happen, and that will come down to how quickly the company can rebuild its bruised reputation and earn the nod from regulators to get back to business as usual. That will likely take most of 2024 -- assuming no new issues emerge. It's hard to imagine the stock heading meaningfully higher until Boeing puts its issues firmly behind it.
The company has ample cash on the books and a $10 billion untapped credit line to fall back on. But until Boeing shows it remembers how to fly safely, new investors should hold off boarding.
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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
