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What Do Analysts Expect of Boeing’s Q4 2018 Earnings?

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Jan. 24 2019, Updated 9:48 a.m. ET

Fourth-quarter expectations

The Boeing Company (BA) is set to report its fourth-quarter earnings results on January 30. The world’s largest airplane maker has an impressive record of beating earnings estimates. Boeing has surpassed Wall Street analysts’ earnings estimates for the last eight quarters, with an average surprise of 9.2%.

It seems that the aircraft manufacturer will continue its trend of reporting better-than-expected bottom line results and seeing strong quarterly earnings growth in the period. Boeing registered robust double-digit earnings growth in each of the first three quarters of 2018.

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Analysts expect Boeing’s fourth-quarter adjusted EPS to rise ~50% YoY to $4.58 on higher revenue, a lower tax rate, and reduced outstanding shares due to the company’s aggressive share buyback program. Wall Street analysts expect the company to see a 6.2% rise in its revenue mainly driven by higher deliveries of its commercial aircraft partially offset by a decline in its defense and space product deliveries.

Further, the company’s tax rate is expected to come down by over 44% to 16.3% in the fourth quarter from 29.3% in the previous year’s quarter mainly due to the enactment of the Tax Cuts and Jobs Act. Its number of shares outstanding is expected to fall 5% YoY (year-over-year) to 574.9 million from 605.1 million.

However, a significant increase in Boeing’s KC-46 Tanker project costs could have a marginal negative impact on its fourth-quarter bottom line results. In the third quarter, the company reported a $112 million cost overrun for the KC-46 Tanker program, which brought the total pretax overrun charge to over $3.5 billion.

Full-year projections

Analysts expect Boeing’s full-year EPS to jump ~47% YoY to $15.13 on higher revenue, a lower tax rate, and fewer shares outstanding. Its revenue for the year is expected to rise 6.8% YoY to $99.8 billion. Its tax rate is expected to fall to 10.2% from 28% in 2017, while its number of shares outstanding is expected to fall 4% to 586.8 million.

Boeing’s management expects its 2018 revenue to come in at $98 billion–$100 billion. Moreover, the company expects its adjusted EPS to be in the range of $14.90–$15.10.

Analysts’ 2018 EPS projections for major aerospace and defense stocks (ITA) Lockheed Martin (LMT), General Dynamics (GD), and Northrop Grumman (NOC) are $17.59, $11.15, and $18.84, respectively, which would mean rises of 36.3%, 12.1%, and 41.9% YoY, respectively.

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