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Boeing's Q1 Commercial Delivery Numbers Lowest in 3 Years
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Aerospace behemoth The Boeing Company (BA - Free Report) reported first-quarter 2017 deliveries, which show that commercial and defense shipments were down 4% and 16%, respectively, on a year-over-year basis. It is the lowest quarterly commercial delivery count in three years.
Q1 Deliveries
Boeing cited lower demand for its 737 and 777 jets as the reason for the year-over-year decline in first-quarter 2017 commercial deliveries of 169 airplanes. Sequentially, the numbers reflected an 8.6% decline. However, this first quarter-end figure beat the deliveries of 136 jets reported by Boeing’s rival, Airbus Group SE (EADSY - Free Report) in the same time frame.
Delivery of the single-aisle 737 jet declined to 113 in the first quarter from 121 a year ago. This was due to Boeing’s greater involvement in the production of a newer version of its most popular plane, the 737 MAX.
Shipments of the 777 and 787 Dreamliners were 21 and 32 compared with 23 and 30 in the year-ago period, respectively. The company deliveried two 767 jets, compared with one in the year-ago quarter. Shipments of 747 remained stable at one year over year.
In the defense and space business, Boeing’s deliveries totaled 42 in the first quarter of 2017, down from 50 a year ago. However, the reported figure was up from 40 in the preceding quarter. Total deliveries consisted of 16 AH-64 Apache helicopters (both new and remanufactured) and 12 Chinook helicopters (new and renewed). The company also delivered six F/A-18s, four P-8 models, three F-15s, and one Commercial and Civil Satellites.
Notably, Boeing’s total deliveries were 211 units in the first quarter of 2017 compared with 226 a year ago.
Q1 Order Details
Looking at Boeing’s first-quarter order details, we note that the company booked 198 net commercial orders (accounting for cancellations). This reflects a decline from the year-ago figure of 768. The figure included 167 orders for the 737, 15 for the 767, 11 for the 787, and nine for the 777 jets. The figure is adjusted for loss of four orders for the 747 model.
On the contrary, Airbus registered net bookings of just six aircraft, trailing far behind Boeing. Boeing and Airbus are the two largest players in the commercial aircraft space and therefore are considered to be direct rivals. The enhanced orders place Boeing in a better position in the industry.
Our View
Boeing’s deliveries were sluggish due to the transition to the 737 MAX. The new MAX planes take longer time in assembling than the old 737 models.
However, deliveries are expected to rise this year once the company begins rolling out the MAX planes. Meanwhile, Boeing intends to cut the production rate of the 777 wide-body jets by 40%.
Moreover, the company anticipates the commercial fleet to double over the next two decades to 45,240 airplanes by the end of 2035, backed by sustained 4.8% annual growth in commercial passenger traffic. Toward that end, it is being estimated that there will be a requirement of 39,620 new planes globally, between 2016 and 2035. This increased demand will call for more jets from Boeing, thereby bolstering its growth manifold.
Boeing is slated to release first-quarter 2017 numbers on Apr 26.
Price Movement
Shares of Boeing have gained 39.7% over the last 12 months, outperforming the Zacks categorized Aerospace–Defense industry’s increase of 24.2%. This could be because the company’s strong balance sheet and cash flows provide financial flexibility in matters of incremental dividend, ongoing share repurchases and earnings accretive acquisitions.
Zacks Rank & Key Picks
Boeing currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the same space are Huntington Ingalls Industries, Inc. (HII - Free Report) and Lockheed Martin Corporation (LMT - Free Report) .
Huntington Ingalls’ delivered a positive earnings surprise of 19.85% in the trailing four quarters. The Zacks Consensus Estimate for 2017 moved up by 2.7% over the last 30 days to $11.28. Huntington Ingalls sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Lockheed Martin carries a Zacks Rank #2 (Buy). On an average, the company has delivered a positive earnings surprise of 12.41% in the trailing four quarters. The company’s 2017 earnings estimates increased 0.2% over the last 30 days.
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Boeing's Q1 Commercial Delivery Numbers Lowest in 3 Years
Aerospace behemoth The Boeing Company (BA - Free Report) reported first-quarter 2017 deliveries, which show that commercial and defense shipments were down 4% and 16%, respectively, on a year-over-year basis. It is the lowest quarterly commercial delivery count in three years.
Q1 Deliveries
Boeing cited lower demand for its 737 and 777 jets as the reason for the year-over-year decline in first-quarter 2017 commercial deliveries of 169 airplanes. Sequentially, the numbers reflected an 8.6% decline. However, this first quarter-end figure beat the deliveries of 136 jets reported by Boeing’s rival, Airbus Group SE (EADSY - Free Report) in the same time frame.
Delivery of the single-aisle 737 jet declined to 113 in the first quarter from 121 a year ago. This was due to Boeing’s greater involvement in the production of a newer version of its most popular plane, the 737 MAX.
Shipments of the 777 and 787 Dreamliners were 21 and 32 compared with 23 and 30 in the year-ago period, respectively. The company deliveried two 767 jets, compared with one in the year-ago quarter. Shipments of 747 remained stable at one year over year.
In the defense and space business, Boeing’s deliveries totaled 42 in the first quarter of 2017, down from 50 a year ago. However, the reported figure was up from 40 in the preceding quarter. Total deliveries consisted of 16 AH-64 Apache helicopters (both new and remanufactured) and 12 Chinook helicopters (new and renewed). The company also delivered six F/A-18s, four P-8 models, three F-15s, and one Commercial and Civil Satellites.
Notably, Boeing’s total deliveries were 211 units in the first quarter of 2017 compared with 226 a year ago.
Q1 Order Details
Looking at Boeing’s first-quarter order details, we note that the company booked 198 net commercial orders (accounting for cancellations). This reflects a decline from the year-ago figure of 768. The figure included 167 orders for the 737, 15 for the 767, 11 for the 787, and nine for the 777 jets. The figure is adjusted for loss of four orders for the 747 model.
On the contrary, Airbus registered net bookings of just six aircraft, trailing far behind Boeing. Boeing and Airbus are the two largest players in the commercial aircraft space and therefore are considered to be direct rivals. The enhanced orders place Boeing in a better position in the industry.
Our View
Boeing’s deliveries were sluggish due to the transition to the 737 MAX. The new MAX planes take longer time in assembling than the old 737 models.
However, deliveries are expected to rise this year once the company begins rolling out the MAX planes. Meanwhile, Boeing intends to cut the production rate of the 777 wide-body jets by 40%.
Moreover, the company anticipates the commercial fleet to double over the next two decades to 45,240 airplanes by the end of 2035, backed by sustained 4.8% annual growth in commercial passenger traffic. Toward that end, it is being estimated that there will be a requirement of 39,620 new planes globally, between 2016 and 2035. This increased demand will call for more jets from Boeing, thereby bolstering its growth manifold.
Boeing is slated to release first-quarter 2017 numbers on Apr 26.
Price Movement
Shares of Boeing have gained 39.7% over the last 12 months, outperforming the Zacks categorized Aerospace–Defense industry’s increase of 24.2%. This could be because the company’s strong balance sheet and cash flows provide financial flexibility in matters of incremental dividend, ongoing share repurchases and earnings accretive acquisitions.
Zacks Rank & Key Picks
Boeing currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the same space are Huntington Ingalls Industries, Inc. (HII - Free Report) and Lockheed Martin Corporation (LMT - Free Report) .
Huntington Ingalls’ delivered a positive earnings surprise of 19.85% in the trailing four quarters. The Zacks Consensus Estimate for 2017 moved up by 2.7% over the last 30 days to $11.28. Huntington Ingalls sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Lockheed Martin carries a Zacks Rank #2 (Buy). On an average, the company has delivered a positive earnings surprise of 12.41% in the trailing four quarters. The company’s 2017 earnings estimates increased 0.2% over the last 30 days.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Click here for Zacks' private trades >>