Boeing Ends Great Year With a Holiday Gift for Investors

Stock Market


Boeing (NYSE:BA) stock advanced about 1 percent on December 17 following news that the company’s board approved $10 billion in additional share repurchases as well as a 50 percent increase in the regular quarterly dividend to 73 cents per share. The repurchase authorization adds to approximately $800 million in repurchasing authority left over from an authorization in 2007.

At a glance, the news is nothing but good for investors and punctuates a strong year for the aerospace company. Third-quarter financial results, released in October, came in ahead of expectations. Revenues increased 11 percent on the year to $22.13 billion, beating the mean analyst estimate of $21.66 billion. Adjusted earnings increased 16 percent on the year to $1.80 per share, beating the mean analyst estimate of $1.54 per share.

Boeing’s success comes despite a long series of technical mishaps with its flagship 787 Dreamliner and, perhaps more importantly, despite a reduction in government spending, which has taken a bite out of Boeing’s defense business. Strong performance from the commercial aircraft unit has more than compensated for the headwinds, though.

Commercial airplane deliveries increased 14 percent on the year to 170, driving a 15 percent increase in segment revenues to $13.99 billion, or around 63 percent of total revenues. Earnings from commercial airplane operations increased 40 percent on the year to $1.62 billion, about 76 percent of total adjusted operating earnings of $2.14 billion. Operating margins within the segment increased 2.1 percentage points to 11.6 percent.

Defense, Space, & Security segment revenues climbed 3 percent on the year to $8 billion. The increase was led by 10 percent growth in Global Services & Support revenue to $2.2 billion and a 9 percent increase in Network & Space System revenue to $2.2 billion, partially offset by a 5 percent decline in Military Aircraft revenue to $3.5 billion.

Total segment earnings from operations fell 19 percent on the year to $673 million, led by a 48 percent decline in earnings from Military Aircraft. Margins shrank 2.1 percentage points to 8.4 percent. Year-to-date earnings are down 2 percent, though, on flat revenues and just a fractional margin reduction. Looking ahead, analysts are expecting current quarter earnings of $1.55 per share, up from $1.28 in the year-ago period, and revenue of $22.41 billion, up just 0.5 percent on the year.

Investing Insights: Is Exxon Mobil a Buy Near All Time Highs?