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Boeing Raises Earnings and Cash Flow Guidance for 2017

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Revenue

In fiscal 2017, Boeing (BA) continues to expect revenue of $90.5 billion–$92.5 billion, which is 3.4% lower than its 2016 revenue of $94.6 billion. Of this revenue, $55.5 billion–$56.5 billion will be contributed by the Commercial Airplanes segment, $20.5 billion–$21.5 billion will be contributed by Defense, Space & Security, and $14.0 billion–$14.5 billion by Global Services.

This guidance means that Boeing expects 4Q17 revenue of $22.5 billion–$24.5 billion. At the midpoint, this revenue means 0.85% growth from its 4Q16 revenue of $23.3 billion, just slightly below Boeing’s record fourth-quarter revenue of $23.6 billion in 4Q15.

Earnings guidance raised

Boeing expects earnings of $2.6 billion in 4Q17, 18% growth from its 4Q16 earnings of $2.2 billion. It raised its earnings per share guidance for 2017 to $9.90–$10.10 from $9.80–$10.

Margins to improve

Job cuts, cost-cutting, and the absence of one-time charges seen in 2016 have helped Boeing improve its margins in 2017. The Commercial Airplanes segment’s operating margin is expected to improve from 4.8% in 2016 to 9.0%–9.5% in 2017. Defense, Space & Security’s operating margin is expected to expand from 10.2% in 2016 to over 10.5% in 2017.

Cash flow guidance increased

The company has also increased its cash flow guidance for 2017. It expects cash flow from operations of $12.5 billion, slightly higher than the $12.3 billion estimate given at the end of 2Q17 and significantly higher than the $10.8 billion estimate given at the start of the year.

Boeing is the third-largest holding of the Dow Jones Industrial Average ETF (DIA), with a ~6% allocation. DIA also has a 3.9% exposure to United Technologies (UTX).

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