Great has been the lamentation, and loud the rending of sackcloth since Boeing (NYSE:BA) reported earnings yesterday morning. It’s been almost loud enough to drown out the sound of gnashing teeth. But with the stock of one of the world's largest manufacturers now down a combined 10%, it’s time to ask: "Mightn't this all be a bit overdone?"

Well, then, let's find out.

The news at (negative) 10 (percent)
Boeing reported flat earnings for its fiscal second quarter at $17 billion. Net income dropped 19%, with stock buybacks paring the decline in per-share earnings to 14%, or $1.16 per share. That's 6% below what Wall Street was expecting, which tells me right off the bat that a 10% haircut on the stock price is probably a bit more than it deserved.

What's more, the underwhelming earnings appear to be a one-quarter phenomenon. Earnings per share for the first half of the year are still up 13% over the same period in 2007. Backlog hit a new record of $346 billion in orders on the books. Management says it is not seeing the order cancellations we've heard predicted in response to fleet reductions at airlines like United (NASDAQ:UAUA), Delta (NYSE:DAL), and American Airlines (NYSE:AMR).

Coming attractions
Why, management even did us a favor and confirmed both its earnings outlook for the rest of this year ... and the outlook for next year, too. Now, the news isn't all good here. Boeing's still looking to barely eke out free cash flow this year. Once you subtract planned capital expenditures from projected operating cash flow, we're left with the expectation of a "mere" (for a $50 billion company, at least) $700 million in free cash flow for fiscal 2008. That should improve next year, though, as free cash flow moves uphill toward $4.3 billion.

Meanwhile, according to the less informative (but more closely followed on Wall Street) metric of GAAP earnings, Boeing's still looking to earn better than $5.70 per share this year, and roughly $6.90 next.

Comely calculations
So let's see here. According to my handy-dandy solar-powered Sharp, that works out to a worst-case scenario of 11 times earnings for the stock this year, and something closer to a P/E of 9 on next year's profits. This, for a stock that most Wall Street savants still expect to grow its profits at nearly 14% per year over the next half-decade -- even after yesterday's mild disappointment. (And did I mention the firm's free cash flow picture is even prettier?)

Listen, as a Boeing shareholder myself, I'm no happier than the next Fool to see my company's operating margin slip down to sub-Northrop Grumman (NYSE:NOC) levels -- however temporarily. I'd much prefer to see Boeing neck-and-neck with uber-defense contractor Lockheed Martin (NYSE:LMT), or with General Dynamics (NYSE:GD) (which is currently top o' the heap, with operating profitability cruising around 11%). But such short-term disappointments are the stuff of which buying opportunities are made. Don't let this one pass you by.

In other news
Boeing announced Wednesday that it will spend some $400 million to buy privately held Insitu, Inc., its co-producer of the ScanEagle unmanned aerial vehicle (UAV). In so doing, Boeing will snap up its partner's share of a $65 million contract to continue operating the ScanEagle for Naval Air Systems Command, announced last month.

According to Boeing, Insitu will book $150 million in sales this year. Now, 2.7 times forward sales may seem a bit on the pricey side. In fact, I'd venture to say it is a bit expensive relative to Boeing's own 0.8 P/S ratio. When Textron went out and bought itself a piece of the UAV space in the form of United Industrial Corp last year, it only cost 1.7 times sales. But if that's the price Boeing must pay to secure its place in the unmanned aerial megatrend, so be it.

If it's any consolation ... remember how I said Boeing is growing at 14% per year, and posted flat sales this past quarter? Well, Insitu's projected to grow its sales by about 72% this year. Seems to me that that pace should justify a bit of a premium.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.