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Boeing (BA) Tops Q3 Earnings Estimates, Updates '17 Guidance

Aerospace giant, The Boeing Company BA reported adjusted earnings of $2.72 per share for third-quarter 2017, beating the Zacks Consensus Estimate of $2.65 by 2.6%. The bottom line, however, declined 22.5% from $3.51 in the year-ago quarter.

On a GAAP basis, the company reported earnings of $3.06 per share compared with $3.60 per share in the year-ago quarter.

Revenues

The company's revenues amounted to $24.31 billion in the reported quarter, missing the Zacks Consensus Estimate of $24.06 billion by 1%. The top line also declined 1.7% year over year.

Total Backlog

Backlog at the end of the third quarter was down to $474.3 billion from $482.2 billion at the end of second quarter. Reported backlog included $16 billion of net orders during the quarter.

Boeing Company (The) Price, Consensus and EPS Surprise

Boeing Company (The) Price, Consensus and EPS Surprise | Boeing Company (The) Quote

Quarterly Segment Results

Commercial Airplane Segment: The segment saw a 1.4% decline in revenues to $14.98 billion. Operating margin for the quarter expanded 140 basis points (bps) year over year to 9.9%.

Boeing reported commercial deliveries of 202 planes during the reported quarter, which was up 7.4%, owing to higher deliveries of 737 model. Meanwhile, the company’s other models 777, 787 and 767 jets registered marginal year-over-year drop in deliveries.

Delivery of the single-aisle 737 jets improved to 145 from 120 a year ago. Evidently, shipments of the 777 and 787 Dreamliners were between 16 and 35 compared with 22 and 36 in the year-ago period, respectively. Boeing also delivered two 767 jets compared with five in the year-ago quarter. Deliveries of 747 jets were four compared with five in the year-ago period.

A look at Boeing’s third-quarter order details reveals that the company booked 127 net commercial orders (accounting for cancellations). This reflects a drop from the year-ago figure of 150.

Boeing Defense, Space & Security (BDS): The segment witnessed an approximate 4.9% year-over-year decrease in third-quarter revenues to $5.47 billion. Operating margin for the quarter expanded 40 bps to 10.2%.

Backlog at BDS was $46 billion, 35% of which comprised orders from international clients.

In the defense and space business, Boeing’s deliveries totaled 44 in the third quarter compared with 50 in the year-ago quarter. Total deliveries consisted of 18 AH-64 Apache helicopters (both new and remanufactured) and 11 Chinook helicopters (new and renewed). Boeing also delivered six F/A-18s, five P-8 models and four F-15s.

Global Services: The segment saw a 1.8% growth in revenues to $3.57 billion. Operating margin for the quarter contracted 70 basis points (bps) year over year to 14.2%.

Boeing Capital Corporation (BCC): Boeing Capital reported quarterly revenues of $70 million compared with $63 million in the year-ago quarter. The segment’s earnings were $23 million compared with $13 million a year ago.

At the end of the third quarter, BCC's portfolio balance was $3.4 billion.

Financial Condition

Boeing exited the third quarter with cash and cash equivalents of $8.57 billion and short-term investments of $1.46 billion. At year-end 2016, the company had $8.80 billion of cash and cash equivalents and $1.23 billion of short-term investments. Long-term debt was $9.78 billion in the third quarter, up from $9.57 billion at 2016 end.

Boeing generated $10.44 billion of operating cash flow in the first nine months of 2017, up 36.2% year over year. Free cash flow was $9.14 billion in the nine months compared with free cash of $5.65 billion in the year-ago quarter.

Guidance

Boeing’s adjusted or core earnings per share expectation for 2017 are in the range of $9.90-$10.10, up from the prior guided range of $9.80-$10.00. GAAP earnings are now projected to be in the range of $11.20-$11.40 per share compared with the previous range of $11.10-$11.30.

The company still expects 2017 revenues in the range of $90.5-$92.5 billion.

Commercial Airplanes' 2017 delivery expectations are reiterated in the band of 760-765 airplanes with revenues projected in the range of $55.5-$56.5 billion. Operating margin is now anticipated to be more than 9.0-9.5% compared with the prior guidance of 10.0%.

The company lowered its projection of 2017 defense revenues in the $20.5-$21.5 billion band compared with prior guidance of $28.0-$29.0. Operating margin is now anticipated to be above 10.5% compared with 11.5%, guided earlier.

Boeing Capital Corp. expects the aircraft finance portfolio to remain stable. The company still anticipates its segment revenues to be approximately $0.3 billion.

Boeing's 2017 R&D is forecasted to be approximately $3.4 billion, down from $3.6 billion, guided earlier. Capital expenditures for 2017 are reiterated to be approximately $2.0 billion.

Zacks Rank

Boeing carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

At Its Peers

Lockheed Martin Corp. LMT reported third-quarter 2017 earnings from continuing operations of $3.24 per share, which missed the Zacks Consensus Estimate of $3.25 by 0.3%. Earnings also declined from the year-ago period’s bottom-line figure by 10.2%.

Textron Inc. TXT reported third-quarter 2017 adjusted earnings from continuing operations of 65 cents per share, beating the Zacks Consensus Estimate of 62 cents by 4.8%. Adjusted earnings were up 6.6% from 61 cents in the year-ago quarter.

Northrop Grumman Corp. NOC reported third-quarter 2017 earnings of $3.68 per share, beating the Zacks Consensus Estimate of $2.92 by 26%. Reported earnings were also up 9.9% from $3.35 recorded in the year-ago quarter.

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Northrop Grumman Corporation (NOC): Free Stock Analysis Report
 
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