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Boeing’s (BA) Q4 Commercial & Defense Jet Deliveries Up Y/Y

Zacks

The Boeing Co. BA 2017 deliveries show a 2% rise in commercial shipments and 5.9% decline in defense shipments, on a year-over-year basis.

2017 Deliveries

The company reported commercial deliveries of 763 jets in 2017, up on higher 737, 747 and 767 deliveries. The figure was within the company’s delivery guidance of 760 to 765.

In 2017, Boeing delivered 529 models of the 737 airplanes, followed by 136 deliveries of the 787 model. In the year-ago period, the company had delivered 490 units of the 737 and 137 units of the 787 model. Boeing delivered 74 units of the 777 model in 2017, compared with 99 units a year ago. Other deliveries include 10 767s and 14 747s, compared with 13 and 9 units, respectively.

In the defense and space business, Boeing’s deliveries were 174 in 2017, down from 185 a year ago. Total deliveries consisted of 68 AH-64 Apache helicopters (both new and remanufactured) and 44 Chinook helicopters (new and renewed). The company also delivered 23 F/A-18s, 19 P-8 models, 16 F-15s, 1 Military Satellites, and 3 Commercial and Civil Satellites.

Q4 Orders & Deliveries

Boeing reported fourth-quarter 2017 commercial deliveries of 209 airplanes, up year over year backed by higher demand for 737 and 747 jets. Sequentially, the numbers went up 3.5%. Delivery of the single-aisle 737 jet increased to 148 in the fourth quarter from 122 a year ago.

Shipments of the 777 and 787 Dreamliners totaled 16 and 36, compared with 26 and 33 in the year-ago period, respectively. For the 747 and 767 jets, the company’s delivered a respective 6 and 3, compared with 1 and 3 in the year-ago quarter.

In its defense and space business, Boeing’s deliveries totaled 43 in the fourth quarter of 2017, up from 40 in the year-ago period. Total deliveries consisted of 17 AH-64 Apache helicopters (both new and remanufactured) and 10 Chinook helicopters (new and renewed). The company also delivered 5 P-8’s, 5 F/A-18s, 5 P-8 models, 5 F-15s and 1 Military Satellites.

Boeing’s total deliveries were 252 units in the fourth quarter of 2017, compared with 225 a year ago.

Our View

Being the largest aircraft manufacturer and one of the largest aerospace and defense contractors in the United States, Boeing enjoys a solid inflow of contracts from both the Pentagon as well as foreign allies, courtesy of its varied product offerings.

In particular, the company’s commercial business has been gaining solid traction in recent days, in the form of huge inflow of jet orders from worldwide airlines. Evidently, last month, Boeing received an order worth $1.1 billion for four 787-9 Dreamliners from Royal Air Maroc. In the same month, it clinched orders worth $27 billion for 175 737 MAX Airplanes from flydubai, with the option for an additional 50 jets.

Moreover, Boeing estimates demand for 41,030 new planes, worth $6.1 trillion, in the next two decades. The company expects cost effective single-aisle jets to be the major demand driver, accounting for 72%. This translates into worldwide demand for 29,530 single-aisle jets, worth $3.2 trillion.

We believe Boeing, with its high quality single-isle 737 model, is well placed to capture a large share of the new orders for commercial jets.

In terms of defense, following the $700-billion fiscal 2018 defense bill, Boeing has been witnessing a solid inflow of defense contract’s. One such contract is the $279-million deal for delivering the first KC-46 tanker and logistics support to the Japan Air Self-Defense Force (JASDF) in the fourth quarter.

We expect a steady inflow of orders and solid demand expectations for Boeing’s commercial fleet to boost upcoming quarterly sales. The Zacks Consensus Estimate for fourth-quarter sales growth is pegged at $24.33 billion, reflecting a year-over-year increase of 4.48%.

Price Movement

Boeing’s stock has moved up about 100.2% in a year, compared with the broader industry’s gain of 48.3%. The outperformance was primarily led by significant demand for its military jets across the globe along with robust long-term demand for its commercial aircraft.



Zacks Rank & Key Picks

Boeing carries a Zacks Rank #3 (Hold).

A few better-ranked stocks from the same space are Aerojet Rocketdyne Holdings, Inc. AJRD, sporting a Zacks Rank #1 (Strong Buy), and Curtiss-Wright Corporation CW and Spirit Aerosystems Holdings, Inc. SPR, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Aerojet Rocketdyne posted an average positive earnings surprise of 19.27% over the last four quarters. The Zacks Consensus Estimate for next-year earnings moved up 9 cents over the past 90 days.

Curtiss-Wright posted an average positive earnings surprise of 11.78% in the past four quarters. The Zacks Consensus Estimate for next-quarter earnings rose by 21 cents over the last 90 days.

Spirit Aerosystems has an average positive earnings surprise of 4.52% for the past four quarters. The Zacks Consensus Estimate for next-year earnings has risen 9 cents in the last 90 days.

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