Boeing Shares Rose More than 6% after Its Q4 Earnings



Boeing’s fourth-quarter results

On January 30, Boeing (BA) shares were trading 6% higher in the pre-market trading session. The company reported better-than-expected fourth-quarter results. Boeing reported an adjusted EPS of $5.48, which was higher than analysts’ estimate of $4.57. The company’s quarterly earnings also increased 8% YoY (year-over-year) from the adjusted EPS of $5.07 reported in the fourth quarter of 2017. The strong bottom-line results were mainly driven by a higher volume, improved product mix, and solid execution.

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Boeing’s fourth-quarter revenues grew 14% YoY and reached a record level of $28.34 billion. The revenues were mainly driven by record commercial airplane deliveries and the higher defense and services volume. The fourth-quarter revenues beat analysts’ consensus estimate of $26.87 billion. The company ended 2018 with a strong backlog of $490 billion, which included orders for nearly 5,900 commercial airplanes.

Boeing recorded revenue growth across all three of its business segments. The Commercial Airplanes segment’s revenues grew 12% YoY to $17.31 billion due to 14% higher deliveries. The Defense, Space, and Security segment’s revenues increased 16% YoY to $6.11 billion due to higher volume across F/A-18, satellites, and weapons. The Global Services segment’s sales rose 29% YoY to $4.89 billion due to the increased parts volume and the acquisition of KLX.

The company’s adjusted operating income rose 49% YoY to $3.87 billion. The adjusted operating margin improved by 310 basis points to 13.6% due to higher revenues and efficient cost management.

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Fiscal 2018 performance

For fiscal 2018, Boeing reported record revenues, earnings, and cash flows. The company’s 2018 total revenues grew 8% YoY to $101.13 billion. Boeing’s revenues beat analysts’ expectation of $99.7 billion and its own guidance range of $98 billion–100 billion.

The adjusted EPS of $16.01 increased 30% YoY and beat analysts’ estimate of $15.13 as well as management’s guidance of $14.90–$15.10. During the year, Boeing generated an operating cash flow of $15.32 billion, which was toward the higher end of management’s guidance range of $15.0 billion–$15.5 billion.

Buoyed by strong fourth-quarter and fiscal 2018 results, Boeing expects its 2019 revenues, earnings, and cash flows to grow. For 2019, Boeing expects its revenues to be $109.5 billion–$111.5 billion. The company expects the adjusted EPS to be $19.90–$20.10. The operating cash flow is expected to be $17 billion–$17.5 billion.

On January 29, Lockheed Martin (LMT) reported an EPS of $19.57 in 2018, which is 11.3% higher than 2017. Analysts’ 2018 EPS projections for other major aerospace and defense stocks (ITA) including General Dynamics (GD) and Northrop Grumman (NOC) are $11.15 and $18.84, respectively, which would mean a rise of 12.1% and 41.9% YoY, respectively.


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