Earnings Watch: Boeing, Caterpillar report disappointing earnings, but their shares bounce back

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Relief that Boeing Co. on Wednesday kept a key timeline for its grounded 737 Max jet boosted shares of the airplane maker and was a spot of good news on a mixed day for earnings.

For the third quarter, Boeing BA, +0.92%  reported per-share adjusted profit that was 60% lower than last year’s and quarterly sales that dropped 20%.

Investors zeroed in on the company’s assurances that its 737 Max, grounded since March after two deadly crashes less than five months apart, would return to the skies later this year. Boeing stock rose more than 3%, on pace for its best one-day increase since Aug. 22.

Some had predicted a return to service in early 2020, especially after allegations that Boeing misled the FAA have clouded the slow-going recertification process for the plane.

Boeing also said it would gradually increase the 737 production rate to 57 a month from 42 a month by late 2020. The company reduced the production rate of its 787 planes, and again refrained from providing an outlook while it sorts out the impact from the 737 Max debacle.

Results were “not great but could have been worse if the Max rate was cut, and the 787 reduction to 12 was not entirely unexpected,” said Robert Stallard, an analyst with Vertical Research Partners, in a note.

Boeing reported third-quarter adjusted earnings of $1.45 a share on sales of $20 billion. Analysts polled by FactSet had expected Boeing to report an adjusted profit of $2.10 a share on sales of $19.6 billion.

Caterpillar Inc.’s CAT, +0.55%  third-quarter results disappointed, missing both third-quarter profit and revenue expectations. None of it was surprising, but “disappointing” margins were, analyst Steven Fisher at UBS said in a note.

“We have been anticipating production cuts to clear inventory, and we see the need for more cuts in the quarters ahead, unless demand reaccelerates,” Fisher said. “We think the stock should give back some recent gains on the margin disappointment, though we observe some investors looking to buy disappointments.”

Caterpillar reported earnings of $2.66 a share on sales of $12.8 billion. Analysts surveyed by FactSet had expected earnings of $2.90 a share on sales of $13.4 billion.

Among other companies reporting Wednesday:

Eli Lilly & Co. LLY, -2.59%   topped profit estimates and its revenue fell short as the volume of some of its key medication increased in the U.S. but declined for others, including its drug to treat erectile disfunction.

Shares of Boston Scientific Corp. BSX, +6.40%  rallied more than 6% after the medical technology company reported third-quarter sales and profit above expectations and lifted its full-year outlook for good measure.

Winnebago Industries Inc. WGO, +10.11%  stock also shot higher on Wednesday, up nearly 10% after the maker to recreational vehicles reported rising fiscal fourth-quarter profit and quarterly revenue that fell less than expected. The company patted itself on the back saying that it was able to deliver “record profitability” despite ongoing headwinds with tariffs and more promotions.

Freeport McMoRan Inc. FCX, +3.52% swung to a third-quarter loss and its revenue missed estimates, but the stock rose on Wednesday after the gold and copper producer said it was on track with large-scale mining projects that would “significantly enhance our cost position, cash flow and the long-term value of our premier copper portfolio, providing opportunities for increased returns to shareholders,” the company said in a statement.

Norfolk Southern Corp. NSC, -2.30%  also reported declines in quarterly profit and sales for the third quarter, pushing the stock lower. Revenue misses in its coal and intermodal business offset a beat in general merchandise.

Shares of Waste Management Inc. WM, -2.16%  fell after the company reported adjusted third-quarter earnings that beat Wall Street expectations and revenue that fell short of forecasts. Sales took a hit from a continued slump in prices of recycled commodities, Waste Management said.

Earnings action continues after the bell with several heavyweights slated to report their third-quarter results later in the day, including Tesla Inc. TSLA, -0.29%, where revenue is seen falling year-on-year for the first time in more than a decade, and Microsoft Corp. MSFT, -0.10%, where profit and sales are seen on the rise.

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