Boeing (NYSE:BA) reports earnings on Oct. 24 before the opening bell. Tremendous demand for many different types of aircraft has bolstered the Chicago-based aircraft giant over the last few years. Although I expect BA will see an upbeat earnings report, other factors indicate that investors should hold off on buying Boeing stock in the near term.

BA Report Will Likely Focus on Earnings Growth

Wall Street forecasts Boeing earnings of $3.47 per share. If the company meets estimates, it will represent a 28% earnings increase over last year. BA reported earnings of $2.72 per share in the same quarter the previous year.

Despite this increase, analysts also expect revenues to decline. They predict consensus revenues of $24 billion, 1% less than last year’s revenues of $24.3 billion.

In May, I proposed that most every company should want the “problems” of Boeing. It holds a backlog of about 5,900 planes worth about $500 billion. The company has added capacity. However, manufacturers such as Spirit AeroSystems (NYSE:SPR), who supply engines for Boeing planes, have failed to keep up, and this has slowed down company production.

Contrary to its reputation, Boeing also acts as a defense contractor. Defense provides about 30% of the company’s revenue. As both the U.S. and many other countries around the world ramp up defense spending, this division should perform for years to come.

Moreover, Boeing also expects the demand for cargo planes to double over the next 20 years. With the need for multiple types of aircraft, even an economic downturn would not end Boeing’s backlog.

Boeing Stock Still Faces Daunting Challenges

Despite the enviable problems, I do not see a reason to rush into this stock. Between the pension worries and the concerns over its business climate, fears of order cancellations have weighed on the stock for most of the year. While I doubt such cancellations will end its backlog, they could significantly reduce the company’s future revenue.

Furthermore, Boeing continues to suffer problems related to its pension shortfall. With an estimated $20 billion deficit as of last year, only GE (NYSE:GE) deals with a more daunting pension deficit than does Boeing. As a result, the company holds a negative stockholders’ equity on its balance sheet despite a market cap of over $204 billion.

Moreover, its price-to-earnings (P/E) ratio stands at around 22.4. While not overpriced, this hardly stands as a bargain. Also, investors need to note the recent history of Boeing stock. Between September 2016 and February 2018, the equity rose by over 180%. That rate of increase made Boeing stock likely due for a pause even without the China worries. Additionally, despite the good news, it has seen some struggles against archrival Airbus (OTCMKTS:EADSY). In 2017, Airbus booked 1,109 orders for aircraft. In the same period, Boeing added 912 orders.

I do not think these challenges will end the company’s backlog or place Boeing stock in any danger. I also believe the future profits will become sufficient enough to ultimately address the pension issue. However, with the stock price increases over the last couple of years and the challenges facing the company, I would discourage investors from paying 24.3 times earnings for BA stock.

The Bottom Line on Boeing Stock

Due to its backlog of orders alone, I expect to hear good news when we receive the quarterly report on Boeing stock on Wednesday. Boeing continues to see double-digit earnings growth. Also, given its history of beating earnings, investors should likely see revenue and earnings numbers that beat the consensus.

Still, other factors encourage caution at this stage. The stock price growth has paused this year amid trade war fears. Moreover, a massive pension shortfall will likely hurt profits and business investment for years to come. Boeing has also lost its lead (at least for now) over Airbus when it comes to new aircraft orders.

The backlog of orders alone makes Boeing stock a buy long term. However, with the pension problems and a comparatively high P/E ratio, investors may want to hold out for a lower valuation, no matter what the earnings report may bring.

As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting.