Published: Wednesday, October 29, 2025 · 6:02 PM | Updated: Wednesday, October 29, 2025 · 6:02 PM
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Boeing shares moved lower after Wednesday morning’s messy third-quarter release. Despite a wider-than-expected loss, operational execution is improving, and the company is well-positioned to deliver more aircraft going forward. That will boost free cash flow, which is the ultimate driver of the share price. Revenue in the third quarter ending Sept. 30 rose 30% year over year to $23.27 billion, topping expectations of $21.97 billion, according to market data service LSEG. Loss per share was narrower year over year, but still $7.47. That was much worse than the $4.59 loss per share the Street had estimated. Analysts were expecting a major charge associated with delays in the 777X program. But the actual charge of $4.9 billion turned out to be bigger than estimates and increased Boeing’s Q3 loss by $6.45 per share. BA YTD mountain Boeing YTD Shares of Boeing, a Club name and one of the 30 components that make up the Dow Jones Industrial Average , fell 4%. The stock, however, was still up more than 20% year to date, as Boeing aircraft have become a way for countries to reduce their trade deficits with the United States. Boeing has gotten lots of international business since President Donald Trump started negotiating and making deals with countries to mitigate tariffs. Trade policy is a major pillar of our investment thesis in Boeing, which we initiated last month . We have been making additional small buys to bulk out the position. Jim Cramer said the Club would have been buyers of Wednesday’s dip if we were not restricted. Bottom line Big per-share losses and charges related to core programs are never good. But what we see overall points to improving operational performance. Starting with the operating loss, the largest contributor was the charge, which we warned members about ahead of the release. Here is what led to the charge: The 777X, an updated version of the wide-body 777 plane, still has not gotten regulatory approval, six years after its initial test flight. While management said the 777X is doing well in subsequent flight testing, the longer-than-anticipated certification process caused them to push out the expected timeline for the first delivery to 2027. Against these challenges, however, there are also many positives. At the core of how many investors value Boeing is free cash flow. Here, we got a very welcome surprise as the company reported its first positive free cash flow since 2023. The Street expected a negative number. Free cash flow was not expected to flip positive until the current fourth quarter. So, that was a bit ahead of schedule. Why we own it Boeing is improving operational execution and will be able to ramp up production on key programs and, in turn, increase monthly deliveries and leading to growth in free cash flow, the most important financial metric for investors when it comes to valuing the stock. Boeing also benefits from U.S. trade policy. Competitors : Airbus Most recent buy : Oct. 10, 2025 Initiated : Sept. 8, 2025 Commercial airplane deliveries, which drive free cash flow, were also a bright spot, increasing nearly 38% year over year to the highest quarterly total since 2018. Better yet, deliveries should continue to improve given that, in October – after the close of the reported third quarter – the Federal Aviation Administration authorized Boeing to increase 737 production to a rate of 42 per month, up from the prior rate of 38 per month. Boeing’s backlog also improved, ending the quarter at $636 billion, nearly $600 billion of which is contractual. Also included in that backlog are over 5,900 commercial aircraft valued at nearly $535 billion. The faster Boeing can deliver planes, the faster it can convert that backlog to actual sales and improve its free cash flow ever further. Given better-than-expected deliveries, the coming increase in monthly production rates, and ahead-of-schedule positive free cash flow, the signs point to improving execution. While looking to increase overall production, management will do so in a disciplined manner. They plan to ramp slowly over time as key performance indicators (KPIs) dictate, to ensure there are no hiccups. For those reasons, we are willing to look past the big Q3 loss and change and focus on the positives. We’re reiterating our buy-equivalent 1 rating and our $275 per share price target. Segment commentary Commercial Airplanes revenue jumped 49% to $11.01 billion in the third quarter. During the post-release conference call, CEO Kelly Ortberg noted that while Boeing will be guided by KPIs, the company sees 787 production increasing eight per month “in the near future.” On the 777X program, Ortberg said, “We’ve accumulated more than 4,000 flight hours, more than double a typical flight test program, and so far, there are no major technical issues on the airplane or on the engine. In the quarter, we completed critical testing of the airplane’s brakes, engines, takeoff performance, and aerodynamic performance. However, we still have a significant portion of the flight test certification program to go.” “This is obviously a disappointment, but we just need more time to complete the certification process,” he added. “[But] demand for the airplane remains strong, and we remain confident that the 777X will be the next flagship airplane for our global customers.” Defense, Space & Security revenue rose nearly 25% to $6.9 billion. This segment develops and produces manned and unmanned military aircraft, as well as weapons systems. Sales and operating margin performance reflected stabilizing operational performance and higher volume. The segment’s backlog increased to $76 billion as orders valued at $9 billion were recorded during the quarter. That’s up from a $74 billion backlog reported in the prior quarter. Global Services revenue increased roughly 9.6% to $5.37 billion. This segment provides services to commercial and defense customers. Sales growth was driven by higher volumes, while year-over-year operating margin expansion reflected favorable commercial volume and mix. The segment’s backlog increased to $25 billion as orders valued at $8 billion were recorded during the quarter. That’s up from a $22 billion backlog reported in the prior quarter. (Jim Cramer’s Charitable Trust is long BA. See here for a full list of the stocks.) 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