Categories Analysis, IPO, Technology

Earnings preview: Defense, jets to drive Boeing Q4 results

Boeing (BA) is scheduled to report its fourth-quarter results on Wednesday before the bell. The aircraft maker is likely to see an increase in defense volume, services growth, and jets delivery contracts. The company will benefit from the KLX acquisition, lower tax rate, and improved Commercial Airplanes performance.

Earnings: Boeing shares rise on upbeat fourth-quarter results

The company has benefited from the growing demand for passenger planes. Boeing has maintained its lead over arch-rival Airbus and is expected to continue the trend during the fourth quarter. The company has depended on the business ties with American Airlines (AA) and United Airlines (UAL) and few regional carriers client list including Hawaiian Airlines and Turkish Airlines.

Analysts project Boeing to post earnings of $4.58 per share on revenue of $26.95 billion for the fourth quarter. In comparison, during the previous year quarter, the company reported a profit of $3.06 per share on revenue of $25.37 billion. Majority of the analysts recommended a “strong buy” or “buy” rating while expecting the stock to reach $415.71 per share in the next 52 weeks.

The results will be benefited by the solid order growth, in the form of the higher backlog. As a major aerospace and defense contractor, the company will likely benefit from the solid inflow of contracts from Pentagon and other foreign allies. Boeing believes lower-than-expected tax rate and improved performance at Commercial Airplanes could benefit the bottom line.

Related: Boeing Q3 2018 Earnings Transcript

The significant commercial contracts that Boeing won include the delivery of 100 737 MAX 8 aircraft to Green Africa Airways for $12 billion, the supply of 40 737 MAX 8 airplanes to a Korea-based airline for $5.9 billion, and the delivery of 30 737 MAX jets to Saudi-based airline for $5.9 billion with an option to add 20 more aircraft.

For the third quarter, Boeing posted a 31% jump in earnings helped by a strong operating performance at Commercial Airplanes and a tax benefit related to the tax settlement. The strong travel demand and improving load factors have prompted for new aircraft orders to increase at a steady pace. Backlogs improved by $3 billion to $491 billion at the end of the third quarter and included net orders of $28 billion.

Shares of Boeing is trading up 1.45% at $363.46 on the NYSE. The stock has risen over 8% in the past year and over 2% in the past three months.

 

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