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Boeing (BA) Tops Q3 Earnings Estimates, Updates '17 Guidance
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Aerospace giant, The Boeing Company (BA - Free Report) 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
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.
Lockheed Martin Corp. (LMT - Free Report) 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 - Free Report) 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 - Free Report) 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.
Zacks' Hidden Trades
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Boeing (BA) Tops Q3 Earnings Estimates, Updates '17 Guidance
Aerospace giant, The Boeing Company (BA - Free Report) 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 - Free Report) 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 - Free Report) 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 - Free Report) 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.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
Click here for Zacks' secret trade>>