Boeing's Backlog Grew to $745 Billion. The Question Remains How Fast It Can Fulfill It

Boeing (NYSE:BA) reported mixed earnings results and a growing backlog of orders in the third quarter of the year. Ultimately, it was management's comments on the timing of fulfilling those orders that sent shares tumbling.

The stock fell nearly 10.7% on Oct. 27.

Boeing reported an adjusted loss per share of $0.34, worse than the $0.21 Wall Street expected. Revenue of nearly $24.2 billion beat expectations of $23.84 billion.

Meanwhile, management said the company's total order backlog at the end of September hit a record of $745 billion, including over 6,300 commercial airplanes, up about $30 billion from the prior quarter.

But the big question on investors' minds is how quickly the company can fulfill all its plane orders and collect the associated revenue.

Image source: Getty Images.

Delayed stability targets

At Boeing, one metric the plane maker focuses on is stability, representing the number of planes the company can build each month without factories and suppliers falling behind or other disruptions.

Earlier this year, Boeing had set a stability rate for its best-selling family of planes, the 737 Max, at 47 per month. But the company has not yet achieved that rate, according to CEO Robert Kelly Ortberg on the company's recent earnings call.

"Our factory's key performance indicators are performing well, particularly in the final assembly where we have seen a 40% improvement in rework since the start of last year," Ortberg said. "However, as I mentioned at a conference last month, it is taking us longer than we had expected to demonstrate performance at rate 47. We are making progress, but we still have more work to do, and I am expecting it will take us into next year to get fully stable at this rate."

Boeing's future goal is to achieve a stability rate of 52 with the 737 family, but now Ortberg doesn't expect that to happen until the back half of 2027.

It's not what investors wanted to hear, considering Boeing's 737 Max 10 model, the largest in the 737 family, recently received certification from the Federal Aviation Administration (FAA), a process that has been in the works for roughly a decade.

The Max 10 is in high demand, with over 1,500 orders from various airlines, according to Reuters.

"Given the fireworks associated with Boeing earnings in the past, this set of results is pretty boring," Vertical Research Partners analyst Rob Stallard wrote in a research note, according to Barron's. "And in this case, boring is good."

Both good and bad news

Obviously, more delays for a company that took a decade to get one of its newest models approved is not ideal. If you're an investor or analyst covering this company, you are likely to take the over on any deadlines set by management.

But more positively, the 737 Max 10 has finally received approval, and the company appears to be winning deals. The U.S. Navy recently selected Boeing for a $20 billion contract to build its sixth-generation fighter aircraft.

The backlog gives Ortberg confidence that the company can generate about $2 billion of free cash flow this year and expand to $10 billion by 2029. However, Wall Street consensus estimates had been modeling $12.5 billion in 2029 prior to the earnings report, according to Barron's.

After another reset, it will likely take investors time to get comfortable with any new targets until they see more tangible progress.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Boeing. The Motley Fool has a disclosure policy.