Boeing (BA 0.31%) is back. After an extended period of disappointing performance, CEO Kelly Ortberg has put the company back on track after taking the reins as CEO in August of last year.
The operational improvements are tangible and particularly important for the investment case. Boeing's huge backlog attests to its potential, which stood at $619 billion at the end of the second quarter.
Still, is it all enough to make the stock a buy?
Three reasons why Boeing stock is exciting
First, the stock appears attractive on a near- to medium-term basis -- at least it does if the company can sustain the improvements generated over the last 12 months. It might surprise many that the leading improvement highlighted is in the aerospace giant's defense segment, known as Defense, Space & Security (BDS). However, a quick look at the chart below shows the scale of the problems BDS has had in recent years, so the recent couple of quarters of profitability are highly welcome.
There's reason to believe that Boeing's profit improvements are sustainable, and that comes down to the fact that the overwhelming part of the losses comes from fixed-price development programs that only constitute 15% of the BDS portfolio. They include four high-profile and problematic programs, including the VC-25 (Air Force One) and the KC-46 refueling tanker.
Management has long argued that its BDS margins will improve once it works through key milestones on these programs, and that appears to be coming through now. It also helps that Ortberg moved swiftly to replace the former BDS CEO, Theodore Colbert (it's not clear whether he was fired or not), with Boeing veteran Steve Parker, who has now been appointed BDS CEO.
Under Ortberg and Parker, BDS is improving its cost estimations for these programs, and it will be fascinating to see if the trend continues in the third quarter.
NYSE: BA
Key Data Points
Boeing's delivery and production rates
Boeing's delivery and production rates are often confused. They are closely related, but not the same. Focusing on its 737 narrowbody, at the end of September, the company had more than 4,800 unfilled orders. To put that figure into context, the Federal Aviation Administration (FAA) imposed a production rate cap of 38 a month for the 737 MAX following a high-profile incident on an Alaska Airlines flight in early 2024.
At a rate of 38 a month, or 456 a year, it would take more than a decade for Boeing to fill its 737 MAX orders. However, the company recently received some very positive news as the FAA approved an increase in the 737 MAX production rate to 42 a month.
The third positive reason to buy the stock is that Boeing is doing a good job on deliveries. As you can see below, its 737 MAX delivery rate has picked up notably in 2025, and the increase in the production rate will only increase the delivery rate over time.
Data source: Boeing presentations. Chart by author.
Putting it all together, Boeing has excellent momentum and a real opportunity to carry on executing on a multiyear backlog. All of which speaks to the near- and medium-term potential for the stock.
One longer-term consideration
It may seem complex, but if you plan to buy and hold Boeing stock long-term, consider this: Is it financially feasible for Boeing to compete in the next generation of aircraft?
Former Boeing CEO Dave Calhoun estimated that a new narrowbody would cost $50 billion in investment over a decade. As of the end of the second quarter, Boeing had $30.3 billion in net debt, and it's fair to say the cycle of cash generation from the 737 MAX has not gone as planned.
Image source: Getty Images.
Moreover, there appears to be a big decision brewing on the horizon with Airbus actively working with CFM International (a GE Aerospace joint venture with Safran) on its RISE program. GE's CEO Larry Culp is "all in" on the open fan technology being developed under RISE.
In comparison, Boeing is believed to favor a traditional ducted engine. RTX's Pratt & Whitney and Rolls-Royce could offer such an engine, and CFM International could provide a ducted engine using RISE technology. However, if the open fan technology wins out under RISE and Boeing doesn't adopt it, it could find itself at a competitive disadvantage even as it tries to fund investment for the new plane -- something to think about.
