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Earnings Preview: The Boeing Company (NYSE: BA)

 January 25, 2010 11:28 AM

The Boeing Company (BA), the world's leading aerospace companies and the largest combined manufacturer of commercial jetliners and military aircraft, is expected to release its fourth quarter earnings on Wednesday, January 27, 2010. But for the June 2009 quarter, the company was in red in the last four quarters ending September 2009.

Boeing is engaged in the design, development, manufacturing, sale and support of commercial jetliners, military aircraft, satellites, missile defense, human space flight, and launch systems and services. The company operates in the US and Europe. The company reports financial results for five business segments: commercial airplanes; Integrated Defense Systems (IDS) comprising Boeing Military Aircraft (BMA), Network and Space Systems (N&SS) and Global Services and Support (GS&S); and Boeing Capital Corporation (BCC).

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 In the third quarter, the company reported a net loss of $219 million, or $2.21 per share (earnings per share of $0.97 in Q3 2008), for the third quarter of 2009 on revenue of $16.7 billion ($15.3 billion).  The third quarter financial results were clearly dominated by 787 cost reclassification and the 747 charge. But excluding those impacts, the double-digit margin performance of the company's two core businesses was strong, even despite market pressures.

Analysts' estimates for the quarter ending December 2009 range from a low of $1 to a high of $1.52, compared to a consensus estimate of $1.362. The consensus EPS forecast has increased over the past week from $1.352 to $1.362 (0.74%) and increased over the past month from $1.354 to $1.362 (0.59%). Of the 23 analysts making quarterly forecasts, 2 raised and 2 lowered their forecast.

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The company expects Q4-2009 EPS to be between $1.29 and $1.49 taking 2009 EPS to be between $1.35 and $1.55 per share, with revenues of $68 billion to $69 billion. The 2009 commercial delivery forecast remains between 480 and 485 airplanes. 2009 operating cash flow remains at greater than $2.5 billion.

Upward revision in earnings estimates is primarily attributable to fourth quarter deliveries at 122 meeting the guidance. In December, acquired Alenia North America's half of Global Aeronautica, LLC, a South Carolina fuselage subassembly facility for Boeing's 787 Dreamliner.  In November, the company was selected to receive federal stimulus funds from the U.S. Department of Energy as part of a three-year study to improve the efficiency and reliability of the United States' power grid. The company was also awarded a $72 million U.S. Air Force contract for more than 2,900 Joint Direct Attack Munition (JDAM) tail kits.

In the last one year, the stock has lost about 4.8%. The stock closed last Friday at $57.77, compared to 52 week range of $29.05 and $62.31. Recently, the company said that its order book exposure to the bankrupt Japan Airlines Corp is around 71 planes worth about $10 billion. This disclosure has led to downward revision in the company's future performance. As a result, I expect the stock to remain flat over the next two quarters.



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