Boeing’s positive surprises
Boeing (BA) has an impressive history of earnings seasons. It has reported positive surprises in each of the four quarters before 3Q15. The third quarter was no different. The company’s results smashed analysts’ expectations, reporting increases in revenues and earnings.
A year of better deliveries
Boeing recently announced it has delivered a record 580 commercial jetliners so far this year. That was one of the most significant indicators that the company was set to see strong revenue inflow. In the third quarter alone, Boeing delivered 199 commercial airplanes.
Most of the demand was for its newer models—the 787 Dreamliner and the Next-Generation single-aisle 737. This is positive news, as the company’s future revenues depend on the success of these models.
A snapshot of 3Q15
For the third quarter, Boeing’s revenues grew 9% year-over-year (or YoY) to $25.8 billion. Revenues were driven by record commercial deliveries, as we’ve already seen. The company’s net earnings soared by about 25% YoY, while operating margins improved to 10% at the end of the third quarter.
This exceptional performance helped the company grow its EPS (earnings per share) by about 33% YoY to $2.47, beating the consensus estimate of $2.20.
On a year-to-date basis, Boeing also has seen revenue growth of 9% YoY, driven by its commercial segment. Net earnings grew more slowly at about 4% YoY. But EPS saw a handsome 10% YoY growth, reflecting a strong performance across the company. This was due to the company buying back its shares.
Boeing is the largest commercial jet manufacturer in the United States and is the world’s second-largest manufacturer behind Airbus. It is also the second-largest defense contractor in the United States behind Lockheed Martin (LMT) and is followed by Raytheon (RTN), General Dynamics (GD), and Northrop Grumman (NOC). Boeing forms ~5% of the Industrial Select Sector SPDR ETF (XLI).