Boeing’s (BA) stock had a tougher week after releasing their Q3 ’25 financial results on Wednesday morning, October 29th, with the stock falling roughly 9% – 10% over the five-day period, thanks to missing on EPS but beating the consensus revenue estimate.
Perhaps lost in the noise of the stock price drop was a Friday, 10/31/25 headline that said that Standard & Poors (the credit rating agency side of the business) was maintaining Boeing’s BBB- credit rating and upgrading the outlook from negative to stable.
The unexpected negative news on the call was that the 777X took a bigger quarterly charge in Q3 ’25, thus causing an actual EPS loss of ($7.47) versus the estimated EPS of ($5.15). The quarterly loss for the Commercial Airline Segment was ($5.3) billion, the largest quarterly loss for Commercial since December ’21’s ($4.45) billion hit.
Per the conference call, quarterly deliveries are at their highest since 2018, BCA backlog continues to improve, Boeing is expected to be free-cash-flow positive in Q4 ’25, but these unexpected hits are just crushing the numbers, even with the Trump Administration’s ongoing, committed support to get Boeing operating at a reasonable production clip in the next few years.
Here’s a longer view of Boeing’s actual and estimates EPS and revenue:
Boeing annual revenue and EPs peaked in 2018 with the aircraft manufacturing giant printing $101 billion in revenue and $17.85 in EPS, while the stock peaked in early 2019 (March ’19 to be exact) at $446 per share.
What’s interesting today is that consensus ’25 revenue is for $87.9 billion in revenue, while ’26 is looking for $97 billion in revenue. Boeing 2025 EPS is now looking for a loss of ($8.58) per share, while ’26 full-year EPS is expected at $2.50.
The point being that revenue has almost returned to 2018’s “peak revenue” and is expected to do so by 2027’s $109 bl consensus revenue estimate, EPS remains well shy of the “peak “$18 per share” we saw in calendar 2018.
And therein lies the rub: with Boeing’s operating leverage, EPS can ramp quickly (i.e. the delta for EPS would normally be much greater for BA’s EPS than it’s revenue), and that would drive EPS growth that would be multiple’s of Boeing’s revenue growth, but the FAA – by limiting Boeing to production increases which the FAA mandates – the EPS cannot lever that quickly.
Boeing is stuck with a controlled-growth environment, until the FAA removes the proverbial “genital cuff” ( a reference from the late 1980’s comedy, “Dirty, Rotten Scoundels” starring Michael Caine, and Steve Martin) but the FAA – even with the Trump Administration support – may not be willing to do that quickly, after the embarrassment of Lion Air and Ethiopian Air crashes, and Boeing’s response thereafter.
Summary / conclusion: From a portfolio construction standpoint, Boeing is an easy long for client portfolios, since it represents a “non-correlated” stock for clients with BA’s 10-year return as of 10/31/25 being 4.46% per year, versus the SP 500’s (SPY) annual return over the last 10 years being 14.54%.
Before last week’s 9% – 10% drop in BA following earnings, the stock was outperforming the SP 500 YTD, but as of Friday, 10/31, BA was up just 13.57% YTD, versus the SP 500’s 17.40%.
Kelly Ortberg walked into a gigantic mess, and I’m sure he’s looking to change the culture at Boeing as much as clean up the manufacturing process and insure that one of the most important manufacturing businesses in America today, can run at 80% – 90% output and maintain the manufacturing integrity necessary for commercial aircraft.
At it’s peak, per this blog’s modeling of Boeing since the 2008 meltdown, “peak BCA” meant that the commercial airline business was 70% of total BA revenue and the operating margin came in a little less in the low 60% range.
While Boeing Defense Systems (BDS) and Boeing Global Services are worth the difference in terms of the commercial airline business, today, those two segments are worth more than 50% of total revenue and operating margin, as commercial airlines works through it’s issues.
More right than wrong happening at Boeing, but the manufacturing giant is still at the mercy of the FAA.
This blog remains long the stock and will continue to add to the position opportunistically as the management team works the regulatory and manufacturing issues.
None of this is advice or a recommendation, but only an opinion. Past performance is no guarantee of future results.
Thanks for reading.