Boeing Shares Surge on Earnings, Guidance
Boeing Co. (NYSE: BA) stock gained nearly 4 percent on Wednesday after the company beat third-quarter earnings estimates and raised its full-year guidance, suggesting 2018 could be a record year for revenue. Concerns over a potential negative impact from the U.S.-China trade war now seem a distant memory for Boeing investors, and analysts say strong global demand and aggressive capital returns will likely keep BA stock flying high.
Boeing reported adjusted third-quarter earnings per share of $3.58 on revenue of $25.15 billion. Both numbers topped consensus analyst estimates of $3.47 and $24.1 billion, respectively. Revenue was up 4 percent compared to a year ago.
[See: 7 Founder-CEOs Doing Fabulously for Shareholders.]
Boeing reported 190 commercial airplane deliveries and operating cash flow of $4.5 billion on the quarter. Boeing's backlog grew to $491 million and includes more than 5,800 planes.
Boeing's commercial airplane segment reported revenue of $15.27 billion, down 1 percent from a year ago. Commercial airplane operating margin was 13.2 percent, up from 9.8 percent in the same quarter last year.
"Our teams continued to perform at a high level during the quarter, driving solid operating performance and robust cash generation, and continuing to deliver on our One Boeing advantage by bringing the best of Boeing to our customers," CEO Dennis Muilenburg says in a statement.
Looking ahead, Boeing raised its full-year EPS guidance from a previous range of between $14.30 and $14.50 to a new range of between $14.90 and $15.10. In addition, Boeing raised full-year revenue guidance by $1 billion for the second consecutive quarter Boeing now expects record 2018 revenue of between $98 billion and $100 billion.
[Read: Pros and Cons for Investing in Boeing.]
Following Wednesday morning's gain, Boeing shares are now up more than 24 percent year-to-date, but Bank of America analyst Ronald Epstein says BA stock is still gaining altitude. Epstein says strong global air traffic is driving demand for Boeing planes, and the company's robust free cash flow and aggressive capital return program will help push the stock higher in the long-term.
"We expect these results to be positively received by the market," he says.
Bank of America has a "buy" rating and $450 price target for BA stock.
Wayne Duggan is a freelance investment strategy reporter with a focus on energy and emerging market stocks. He has a degree in brain and cognitive sciences from the Massachusetts Institute of Technology and specializes in the psychological challenges of investing. He is a senior financial market reporter for Benzinga and has contributed financial market analysis to Motley Fool, Seeking Alpha and InvestorPlace. He is also the author of the book "Beating Wall Street With Common Sense," which focuses on the practical strategies he has used to outperform the stock market. You can follow him on Twitter @DugganSense, check out his latest content at tradingcommonsense.com or email him at wpd@tradingcommonsense.com.
