Following the release of third quarter 2012 results, most of
the analysts providing estimates for
The Boeing Company
) have raised their earnings estimates for 2012. The revision in
estimates mainly reflects the guidance provided by the company.
Third Quarter 2012 Recap
Boeing posting strong core performance registered earnings per
share of $1.35 which surpassed the Zacks Consensus Estimate of
$1.12. The strong performance of the company stemmed from another
solid quarter at its commercial segment, which registered 17%
growth in commercial airplane deliveries in the period.
Total revenue grew 13% year over year to $20 billion. The top
line marginally missed the Zacks Consensus Estimate of $20.1
Taking into account its performance in the first nine months of
2012, Boeing raised its full year 2012 earnings per share
guidance to a range of $4.80-$4.95 from its earlier guidance
range of $4.40-$4.60. The company also raised its revenue
guidance for 2012 to the range of $80.5 billion - $82 billion
versus the earlier range of $79.5 billion - $81.5 billion.
The company maintained its Commercial Airplanes' 2012 deliveries
for 2012 between 585 and 600 airplanes, which are already sold
out. This includes an expected 70 to 85 787 and 747-8 deliveries.
Commercial Airplanes' 2012 revenue is expected to be between
$47.5 billion and $49.5 billion with operating margin hovering
In the defense space, the company expects defense revenue for
2012 to be between $32.5 billion and $33.0 billion versus its
earlier range of $31.5 billion and $32.0 billion with operating
margin greater than 9%. Boeing Capital Corporation expects that
its aircraft finance portfolio will continue to decline in 2012.
(Read our detailed earnings report at:
Boeing Beats EPS, Misses Revenue
Agreement of Analysts
Estimate revisions for 2012 indicate a significant positive bias.
Of the 21 available estimates, 19 estimates moved up for 2012
following the release of third quarter 2012 results with no
estimates moving down.
Meanwhile, the estimate revisions over the last 30 days for the
final quarter of 2012 also show a similar trend with 11 of the 20
estimates heading north with just 2 moving in the opposite
The upward revision in estimates reflects Boeing's strong
performance in the third quarter and its raised outlook for 2012.
Following the release of third quarter results, Boeing upped its
earnings outlook for 2012 to $4.80-$4.95 (old guidance:
$4.40-$4.60 per share).
Magnitude - Consensus Estimate Trend
With the significant positive bias in estimate revisions,
estimates for both full-year 2012 and the ongoing quarter have
gone up by a few cents. While 2012 estimates are up by 27 cents,
ongoing quarter estimates have been raised 5 cents.
The Zacks Consensus Estimate for full-year 2012 and the ongoing
quarter now stands at $4.98 and $1.17 per share, respectively.
Neutral on Boeing
Boeing enjoys a unique position as the largest aircraft
manufacturer in the world in terms of revenues, orders and
deliveries, and is also one of the largest aerospace and defense
contractors. Besides, its revenues are spread across more than 90
countries around the globe.
The company is among the best-positioned in its sector due to its
balanced exposure to commercial aircraft and defense equipment.
With the gradual recovery of the global economy, we believe
freight and passenger traffic will improve going forward. Also,
the U.S. defense budget is skewed towards a number of prominent
Overall, the growth momentum will be maintained by an order
backlog close to $378 billion, planned production rate increases
and a globally diversified customer base. However in the near
term, headwinds over the global airline industry along with
expected cutbacks in the U.S. defense budget loom large over the
current valuation of the company. Thus, considering the
fundamentals, we are maintaining our Neutral recommendation on
BOEING CO (BA): Free Stock Analysis Report
GENL DYNAMICS (GD): Free Stock Analysis
LOCKHEED MARTIN (LMT): Free Stock Analysis
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Boeing currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. This is in sync with other aerospace and
General Dynamics Corporation
Lockheed Martin Corporation
About Earnings Estimate Scorecard
As a PhD from MIT, Len Zacks proved over 30 years ago that
earnings estimate revisions are the most powerful force impacting
stock prices. He turned this ground breaking discovery into two
of the most celebrating stock rating systems in use today. The
Zacks Rank for stock trading in a 1 to 3 month time horizon and
the Zacks Recommendation for long-term investing (6+ months).
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