Aerospace and defense giant The Boeing Company (BA – Free Boeing Stock Report) has reported December-period financial results. For the quarter, revenues came in at $28.3 billion, which was well ahead of consensus analyst estimates, represented a year-over-year gain of 14%, and was a record for the Chicago-based corporation. As for the bottom line, Boeing also easily eclipsed estimates and achieved a hefty share profit of $5.93. Management also introduced favorable guidance for 2019. All told, Boeing shares advanced nicely on the news.
Looking at the quarter in more detail, the company delivered 238 commercial aircraft, compared to 209 in the year-earlier period. Revenues in the Commercial Airplanes segment expanded 12%, to $17.3 billion, and the operating margin widened 400 basis points, to 15.6%. Better execution, reduced operating expenses, lower R&D expenditures, and the sale of more profitable aircraft all helped margins at this division. During the period, Commercial Airplanes also booked 262 net orders, and its backlog now stands at 5,900 planes valued at $412 billion.
The Defense, Space & Security division experienced a 16% top-line increase, which mostly stemmed from greater deliveries of satellites, air tankers, fighter aircraft, and weapons systems to the U.S. military and its allies. Its backlog at quarter end was $57 billion, with 30% representing orders from international customers.
All told, Boeing's December quarter was quite remarkable, and management expects the good times to persist throughout 2019. Specifically, its financial guidance calls for the top and bottom lines to reach $109.5 billion-$111.5 billion and $21.90-$22.10 per share, respectively. The midpoints of these respective ranges would result in year-over-year revenue and share-net gains of 9% and 23%.
We have raised our near-term estimates. Because of the December outperformance, the company's guidance, and the fact that Boeing's prospects appear excellent, we now expect 2019 revenues and earnings of $112 billion and $22.25 per share, which are slightly higher than management's ranges. Simply put, we expect Boeing to continue to fire on all cylinders, as demand, deliveries, and orders for its products remain robust.
As for the stock, as mentioned, it advanced nicely following the quarterly report, and has easily outperformed the broader market over the past couple of years. As such, the equity now appears fully valued in terms of price-to-earnings and many other valuation metrics. We would not blame some current shareholders from taking profits and buying back the stock following any material dips in price. As for investors pondering new commitments, we suggest waiting for a better entry point.
About The Company:The Boeing Company is a leading manufacturer of commercial jet aircraft. It also produces fighters (F-15, F/A-18), C-17 cargo carrier, V-22 helicopter, E-3 AWACS, E-4 command post, E-6 submarine communicator, ground transportation systems, develops the space station, and does work on the F-22 (ATF).
- Ian Gendler
