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Boeing Q2 Commercial Deliveries Up Y/Y, Defense Takes a Hit

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The Boeing Company (BA - Free Report) recently announced program deliveries across its commercial and defense operations for the second quarter of 2018. The figures show a 6% rise in commercial shipments and 64.4% decline in defense shipments from the previous year.

Q2 Orders & Deliveries

Boeing reported second-quarter 2018 commercial deliveries of 194 airplanes, up year over year, primarily backed by the higher demand for 737 jets. Delivery of the single-aisle 737 jet increased to 137 in the second quarter of 2018 from the year-ago number of 123.

Shipments of the 777 and 787 Dreamliners totaled 13 and 38 in the second quarter compared with 21 and 33 in the year-ago period, respectively. For the 747 and 767 jets, the company delivered one and five jets, respectively, compared to three 747 and 767 jets each sold in the year-ago quarter.

In its defense and space business, Boeing’s deliveries totaled 16 in second-quarter 2018, which plunged from 45 dispatched in the year-ago period. Total deliveries consisted of nine CH-47 Chinook helicopters (new and renewed), four P-8’s and three F-15 military aircraft.

Boeing’s total deliveries were 210 units in the second quarter of 2018 compared to 228 delivered in the year-ago quarter.

Analyzing the Deliveries

Being the largest aircraft manufacturer, and one of the largest aerospace and defense contractors in the United States, Boeing enjoys a solid inflow of contracts from both the Pentagon as well as foreign allies, courtesy of its varied product offerings.

In particular, the company’s commercial business has been gaining traction in recent days, in the form of huge inflow of jet orders from airlines worldwide. Evidently, last month Boeing inked a deal with Jet Airways to deliver 75 737 MAX Airplanes worth $9 billion. During the same time frame, it entered into a $5.6 billion agreement with Bamboo Airways to provide them with 20 787-9 Dreamliner aircraft. Such frequent and large contract wins are expected to escalate production and improve deliveries in the upcoming quarters.

On the commercial front, Boeing estimates demand for 41,030 new planes, worth $6.1 trillion in the next two decades. The company expects the cost effective single-aisle jets to account for about 72% of the total projection with widebody jets likely to make up for more than 20%. This translates into worldwide demand for 29,530 single-aisle jets, worth $3.2 trillion and 8,210 widebody jets, worth $2.5 trillion. Such projections will aid Boeing in maintaining its global leadership position as one of the largest commercial jet maker.

However, dearth of generous contracts for its military jets in the second quarter might have hampered the company’s defense business’ deliveries. Nevertheless, the fiscal 2019 defense budget, approved last
month by the U.S. Senate, includes a spending provision of $8.5 billion for the varied defense programs of Boeing. This, in turn, should boost the order growth for the company’s defense programs, in days ahead.

Price Movement

Boeing’s stock rallied about 68.3% in a year compared with the industry’s growth of 30.4%. The outperformance was primarily led by the robust worldwide demand for its commercial aircraft and military jets.

Zacks Rank & Key Picks

Boeing currently sports a Zacks Rank #1 (Strong Buy). A few other top-ranked stocks in the same space are Northrop Grumman (NOC - Free Report) , Wesco Aircraft Holdings (WAIR - Free Report) and Engility Holdings .

While Northrop Grumman and Wesco Aircraft Holdings sport a Zacks Rank #1, Engility Holdings carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Northrop Grumman delivered an average positive earnings surprise of 13.87% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by 6.6% to $16.62 in the last 90 days.

Wesco Aircraft Holdings’ long-term growth rate is pegged at 12%. The Zacks Consensus Estimate for 2018 earnings has risen by 10% to 77 cents in the last 90 days.

Engility Holdings came up with an average positive earnings surprise of 15.08% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by 0.5% to $1.91 in the last 90 days.

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