Dow Jumps After Boeing Earnings, Outlook Smash Expectations

Boeing shares soared more than 6%, and are set to take out all time highs of $392 after reporting earnings that smashed expectations and unveiling guidance that was far higher than consensus.

Boeing's annual sales topped $100 billion for the first time in its 102-year history according to Bloomberg, with the US planemaker, whose former employees are now close advisors to President Trump saying even more gains are on tap for 2019 as it bounces back from production snarls with its 737 jetliners.

The company reported 4Q core EPS $5.48, smashing estimates of estimate $4.59, and printing well above the high end of the forecast range ($4.36 to $4.87). Revenue of $28.34 billion also trounced expectations of $26.93 billion (range $25.46 billion to $28.24 billion), with the company reporting a 4Q backlog $490 billion and operating cash flow $2.95 billion.

More importantly, looking ahead the company said that adjusted earnings will be $19.90 to $20.10/share this year as sales climbed across all businesses, far above the analyst consensus of $18.44. Operating cash flow will be as much as $17.5 billion.

Tangentially, it is worth recalling that Trump's acting defense secretary, Patrick Shanahan, worked at Boeing; additionally Trump's deputy National Security Advisor, Charlie Kupperman, also worked at Boeing.

Some more highlights from Boeing's impressive quarter, via Bloomberg:

  • Sales climbed across all businesses. The defense division was a bright spot in the fourth quarter, with a 16 percent sales gain. That softened the blow from factory stumbles that slowed deliveries of the workhorse 737 jetliners, Boeing’s biggest source of profit.
  • Costly out-of-sequence work on commercial aircraft weighed on results, dragging free cash flow down to $2.45 billion in the fourth quarter. Analysts had predicted $2.52 billion.
  • Increased jetliner production is crucial to Boeing’s plans to boost cash flow. Expect analysts to focus on the strength of the company’s supply chain. Investors listening to this morning’s 10:30 a.m. conference call also will look for clues about a proposed midmarket aircraft.
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