BA Stock Underperforms Industry YTD: What Should You Do Now?

Boeing (BA) shares have significantly underperformed the aerospace-defense industry year-to-date, primarily due to persistent supply-chain disruptions, geopolitical tensions, and trade disputes that are delaying aircraft deliveries and increasing production costs, despite recovering global air travel demand. Although Boeing reported strong Q3 2025 commercial deliveries and orders, and is implementing initiatives like the Rapid Delivery Release for defense contracts, the company faces a record 17,000-unit aircraft backlog and declining EPS estimates for 2025 and 2026. This, combined with a negative average earnings surprise and poor return on invested capital, leads to an "avoid" recommendation for the stock, notwithstanding its current valuation discount.

Analysis

Boeing (BA) shares have significantly underperformed the Zacks Aerospace-Defense industry year-to-date, rallying only 9.9% against the industry's 32.5% growth. This is primarily attributed to persistent supply-chain disruptions, including critical component shortages, which delay aircraft deliveries and increase production costs. Geopolitical tensions and trade disputes, particularly with China, further exacerbate these challenges, potentially impacting Boeing Commercial Airplanes' (BCA) revenues and increasing inventory costs.

Despite recovering global air travel demand, the industry faces constraints, with aircraft deliveries 30% below previous peaks, contributing to a record 17,000-unit global backlog. Boeing's financial outlook reflects these headwinds, with Zacks Consensus Estimates indicating substantial EPS decreases for 2025 (-310.48%) and 2026 (-34.86%) over the past 60 days. The company also exhibits a negative average earnings surprise of 22.4% and a negative return on invested capital (ROIC), signaling inefficient capital deployment.

While Boeing remains a leading manufacturer and reported strong Q3 2025 BCA segment growth (38% delivery increase, 49% revenue surge) and 161 net commercial orders, these positives are overshadowed by broader systemic issues. The Rapid Delivery Release (RDR) mechanism for defense contracts offers a potential operational lever, but its overall impact is yet to be fully realized. Despite trading at a forward 12-month P/S of 1.57X, a discount to the industry average of 2.35X, this valuation appears insufficient to offset the significant operational and financial risks.

Key Decisions for Investors

• Investors should consider avoiding new positions in Boeing (BA) or evaluating existing holdings for divestment, aligning with the Zacks Rank #4 (Sell) recommendation.
• Closely monitor developments in global supply chains and US-China trade relations, as these factors are critical to Boeing's aircraft delivery schedule and revenue prospects.
• Look for concrete improvements in Boeing's return on invested capital (ROIC) and a reversal in negative EPS estimate trends before considering a long position.
• Evaluate relative performance and financial stability of industry peers like General Dynamics (GD) and Northrop Grumman (NOC) for potentially more favorable risk-adjusted opportunities within the aerospace-defense sector.