Boeing stock (NYSE: BA) is scheduled to report its Q3 2022 results on Wednesday, October 26. We expect BA stock to trade higher, with its revenues and earnings falling above the consensus estimates. A rise in passenger air traffic over the recent quarters has resulted in higher demand for aircraft and aftermarket, boding well for Boeing. The company is also focused on improving its monthly deliveries and bolstering its top-line growth. Not only do we expect Boeing to navigate well in Q3, but we also find it undervalued, as discussed below. Our interactive dashboard analysis of Boeing’s Earnings Preview has additional details.
(1) Revenues expected to be above the consensus estimates
- Trefis estimates Boeing’s Q3 2022 revenues to be around $18.5 billion, reflecting a significant 21% y-o-y growth and slightly above the $18.0 billion consensus estimate.
- Boeing should benefit from rising passenger air traffic and its focus on improving production.
- That said, there are near-term headwinds, including labor issues and supply chain disruption for its suppliers, which impacted Boeing’s performance in the recent past.
- Looking at Q2, Boeing reported a 2% fall in total revenue to $16.7 billion, as a 5.7% rise in global services and a 3.3% rise in the commercial airplanes segment was more than offset by a 10% fall in defense, space, and security sales.
- Our Boeing’s Revenues dashboard offers more details on the company’s segments.
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(2) EPS likely to be above the consensus estimates
- Boeing’s Q3 2022 adjusted earnings per share (EPS) is expected to be $0.05 per Trefis analysis, compared to the $0.02 consensus estimate and $(0.60) the company reported in the prior-year quarter.
- Boeing’s adjusted net loss of around $221 million in Q2 2022 reflected a significant decline from about $236 million net profit seen in the prior year quarter. This can be attributed to lower revenues, and a 150 bps fall in adjusted operating margin.
- Looking forward, for the full-year 2022, we expect the adjusted loss per share to be lower at $1.93, compared to the $9.44 loss per share in 2021.
(3) Boeing stock looks undervalued
- We estimate Boeing’s Valuation to be $205 per share, reflecting a significant 45% upside from the current levels of $141.
- At its current levels, BA stock is trading at 1.1x forward expected revenues, significantly below its last three-year as well as last five-year average of around 2.3x, implying that BA stock is undervalued.
- Furthermore, if the company reports upbeat Q3 results and provides an outlook better than the street estimates, the P/S multiple will likely be revised upward, resulting in higher levels for BA stock.
Furthermore, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised at how counter-intuitive the stock valuation is for Textron vs. Whirlpool.
With higher inflation and the Fed raising interest rates, among other factors, Boeing stock has fallen 30% this year. Can it drop more? See how low Boeing stock can go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.
|S&P 500 Return||5%||-21%||68%|
|Trefis Multi-Strategy Portfolio||1%||-25%||196%|
 Month-to-date and year-to-date as of 10/23/2022
 Cumulative total returns since the end of 2016