The Boeing Company Earnings: Can They Fly Even Higher?

Boeing has ridden the wave of commercial aircraft demand, but will earnings keep growing?

Apr 21, 2014 at 11:15AM

On Wednesday, Boeing (NYSE:BA) will release its quarterly report, and investors are bracing for a decline in earnings even though revenue continues to power ahead. The real question for Boeing investors, though, is whether the aerospace giant can stay ahead of rival Airbus on the commercial side as well as Lockheed Martin (NYSE:LMT) and other defense-sector peers on the military side. The key to Boeing's eventual success will be to follow through on orders it already has in its extensive backlog.

From a macroeconomic perspective, Boeing is more than just a company. It represents a critical part of the U.S. economy, with major companies General Electric (NYSE:GE) and United Technologies (NYSE:UTX) getting a huge amount of their own aerospace business from work for the aircraft-manufacturing giant. But if Boeing starts to fall, it could spell problems for a wide swath of related businesses. Let's take an early look at what's been happening with Boeing over the past quarter and what we're likely to see in its report.

Ba
Source: Boeing.

Stats on Boeing

Analyst EPS Estimate

$1.56

Change From Year-Ago EPS

(9.8%)

Revenue Estimate

$20.19 billion

Change From Year-Ago Revenue

6.9%

Earnings Beats in Past Four Quarters

4

Source: Yahoo! Finance.

Will Boeing earnings take flight?
In recent months, analysts have gotten quite pessimistic in their views on Boeing earnings, cutting their first-quarter estimates by 10% and reducing full-year 2014 and 2015 projections by 1%-3%. The stock has also pulled back, falling 8% since mid-January.

Boeing's fourth-quarter-earnings report got 2014 started on the wrong foot as investors ignored strong performance at the end of 2013 and focused instead on slowing core earnings-per-share growth guidance for 2014. Even though Boeing has lowballed its early earnings projections in the past, Boeing shareholders have had an itchy trigger finger in light of the huge gains its stock gave them last year. Although Boeing's commercial aircraft unit appears well poised for future growth, Boeing's defense business has taken hits from government budget cuts and increasing competition, giving bearish shareholders an argument to support their lack of confidence going forward.

Ba

Source: Boeing.

In order to boost revenue and earnings, Boeing faces a tough order: ramping up its production so that it can clear through its massive backlog and deliver aircraft in a more timely fashion. Boeing has already said that it delivered 161 commercial airplanes in the first quarter, up 18% from the year-ago quarter. Yet although deliveries of next-generation 737 aircraft appear to be going strong, 787 Dreamliner deliveries actually fell compared to the fourth quarter of 2013. Until Boeing can dependably boost production without sacrificing quality, it will have trouble realizing the full potential of its current growth opportunity, and that has negative implications for General Electric, United Technologies, and countless smaller suppliers that rely on Boeing for much of their business in the aircraft industry.

Fortunately, Boeing sees no end to demand for commercial aircraft. Boeing has highlighted the Asia-Pacific region as a huge growth prospect, with more than a third of its deliveries in the next two decades coming from that region according to its estimates. Although Airbus will undoubtedly fight for market share, Boeing has managed to deliver more aircraft than Airbus in recent years, giving Boeing more leverage to attract future orders.

At the same time, Boeing is still looking to bolster its military prowess. With recent attempts to have the U.S. government add appropriations for its EA-18G Growler attack plane, it hopes to unseat Lockheed Martin's F-35 fighter -- or at least take a portion of its massive budget allocation.

In the Boeing earnings report, watch to see how the company expects to bolster deliveries further and address quality concerns that have plagued the manufacturer for more than a year now. For now, it appears that Boeing stock is taking a pause from its huge gains, but it will need to demonstrate its continued superiority in order to produce another year of good returns for shareholders.

Say goodbye to "Made in China"
For the first time since the early days of this country, we're in a position to dominate the global manufacturing landscape thanks to a single, revolutionary technology: 3-D printing. Although this sounds like something out of a science fiction novel, the success of 3-D printing is already a foregone conclusion to many manufacturers around the world. The trick now is to identify the companies -- and thereby the stocks -- that will prevail in the battle for market share. To see the three companies that are currently positioned to do so, simply download our invaluable free report on the topic by clicking here now.

Click here to add Boeing to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Dan Caplinger owns shares of General Electric Company. The Motley Fool owns shares of General Electric Company and Lockheed Martin. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers