Aerospace & defense behemoth,
The Boeing Company
) is all set to report its third quarter 2012 results before the
start of trading on October 24, 2012. The Zacks Consensus
Estimate for the third quarter of 2012 is $1.12 (year-over-year
decrease of 23.1%) on revenues of $20,110 million (year-over-year
increase of 13.4%).
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Boeing posted second quarter 2012 earnings per share (EPS) of
$1.27, beating both the Zacks Consensus Estimate of $1.11 and
year-ago EPS of $1.25. The company witnessed 27% higher
commercial airplane deliveries while its defense business,
showing resilience, clocked higher revenues and strong margins in
a difficult market environment.
On the revenue front, the company witnessed its quarterly revenue
rise 20.9% year over year to $20.0 billion, above the Zacks
Consensus Estimate of $19.4 billion.
Boeing raised its fiscal 2012 earnings per share guidance to a
range of $4.40-$4.60 versus its earlier guidance range of
$4.15-$4.35. The company also raised its revenue guidance for
2012 to the range of $79.5 billion - $81.5 billion versus the
earlier range of $78.0 billion-$80.0 billion.
(Read our full coverage on this earnings report:
Boeing Tops, Raises Outlook
Agreement of Estimate Revisions
Over the last 7 days, 2 of the 18 analysts covering Boeing for
the third quarter of 2012 have upped their earnings estimates
with 1 downward movement. Prior to that, the company, over the
last 30 days, has also witnessed a positive bias among analysts
regarding estimate revisions. In the aforementioned period Boeing
witnessed 7 upward moves versus 3 downward revisions.
The upward revisions are mainly attributed to Boeing's status as
the largest aircraft manufacturer in the world in terms of
revenue, orders and deliveries, and one of the largest aerospace
and defense contractors. Its revenue exposure is spread across
more than 90 countries around the globe. Due to the continuing
recovery of the global economy, demand for Boeing's Commercial
Airplanes is benefiting from a steady improvement in passenger
and freight traffic. To catch up with the expected rise in air
traffic and to check fuel bills, airliners will need to replace
older airplanes with new ones. The company is slated to benefit
greatly from improving air traffic.
Per the company, the worldwide market for new commercial
airplanes is expected to be $4.5 trillion in the next 20 years.
Boeing's projection of growth is based on the strength of the
commercial aviation market, recovery witnessed in world economies
and strong demand for fleet addition and replacement. Airline
traffic is forecast to grow at a 5% annual rate over the next two
decades, with cargo traffic projected to grow at an annual rate
The downward revisions are attributed to the cautious stance of
some analysts in the face of downward U.S. defense budget trends
and the incoming effect of sequestration currently required under
the Budget Control Act.
Estimates for 2012 have also witnessed a positive bias. Consensus
2012 earnings estimate of $4.71, composed of 22 estimates,
witnessed 4 upward revisions compared with 2 downward revisions
over the last 30 days.
Magnitude of Estimate Revisions
Given the positive sentiment in earnings estimate revisions
witnessed over the last month, the consensus earnings estimate
for the third quarter of 2012 has gone up by a penny to $1.12.
Earnings estimate for 2012 has remained fixed at $4.71 per share
over the last 30 days.
Boeing has consistently surpassed earnings estimates in the last
four quarters. The company recorded a maximum positive surprise
of 31.53% in the third quarter of 2011. On an average, the
earnings surprise was 22.80%.
Boeing currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. Considering the fundamentals, we are
maintaining our Neutral recommendation on the stock. This is in
sync with other aerospace and defense behemoths. A clearer
picture will emerge next Wednesday when Boeing along with defense
Lockheed Martin Corporation
Northrop Grumman Corporation
) release their versions of the third quarter of 2012.