Boeing Nosedives on Record Losses in 2020
- By James Li
Shares of Boeing Co. (NYSE:BA), a major aircraft manufacturer, tumbled over 2% in morning trading on Wednesday on the heels of reporting a record net loss in 2020.
For the quarter ending December 2020, the Chicago-based company reported a net loss of $8.439 billion, or $14.65 in loss per share, compared with a net loss of $1.01 billion, or $1.79 in loss per share, in the prior-year quarter. Adjusted losses of $15.25 per share came in worse than the consensus estimate of $1.80.
Pandemic shutdowns hinder operations throughout the year
Boeing President and CEO Dave Calhoun said that 2020 featured a year of "profound societal and global disruption" in the airline and aircraft markets: "The deep impact on the pandemic on commercial air travel, coupled with the 737 Max grounding, challenged our results."
The aircraft giant record $468 million in abnormal production costs related to the 737 program. Boeing also announced that it postponed the first delivery of the wide-body 777X aircraft to late 2023, reflecting updated assessments of global certification requirements and demand for wide-body aircraft.
Boeing's news release comes not even a week after global Coronavirus cases topped 100 million in approximately 13 months according to Johns Hopkins University statistics. Countries around the globe have resumed or tightened international travel restrictions to combat the spread of Covid-19 variants that could be more contagious than the parent variant.
Calhoun said on CNBC's "Squawk on the Street" that slow rollouts of Covid-19 vaccines could further hamper a "desperately needed recovery in travel demand" until mid-to-late summer.
Stock falls on record net loss, sending the Dow down
Shares of Boeing traded at an intraday low of $191.85, down approximately 5% from Tuesday's close of $202.06. The stock is modestly undervalued based on Wednesday's price-to-GF-Value ratio of 0.88.
GuruFocus ranks Boeing's financial strength 3 out of 10. Although the company has a safe Beneish M-score of -8, Boeing has a low Piotroski F-score of 2 and a weak Altman Z-score of 1.34.
Gurus hoping for better news from Boeing include Pioneer Investments (Trades, Portfolio) and the T Rowe Price Equity Income Fund (Trades, Portfolio), which maintain long positions in the stock.
The Dow Jones Industrial Average traded as much as 584 points below the previous close of 30,937.04, hitting an intraday low of 30,353.04 in Wednesday morning trading. CNBC said that "intensifying speculative behavior" among retail investors stoked trepidation from investors. Stocks like GameStop Inc. (NYSE:GME), AMC Entertainment Holdings Inc. (NYSE:AMC) and Bed Bath & Beyond Inc. (NASDAQ:BBBY) surged as investors attempt to cover short positions.
Disclosure: No positions.
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This article first appeared on GuruFocus.
