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Boeing (BA) Q1 Commercial Deliveries Up Y/Y, Defense Slips


The Boeing Company BA recently announced the program deliveries across its commercial and defense operations for the first quarter of 2018. The figures show an 8.9% rise in commercial shipments and 40.5% decline in defense shipments from the previous year.

Q1 Orders & Deliveries

Boeing reported first-quarter 2018 commercial deliveries of 184 airplanes, up year over year primarily backed by higher demand for 737 jets. Delivery of the single-aisle 737 jet increased to 132 in the first quarter of 2018 from 113 a year ago.

Shipments of the 777 and 787 Dreamliners totaled 12 and 34, compared with 21 and 32 in the year-ago period, respectively. For the 747 and 767 jets, the company delivered 2 and 4 jets, respectively compared with 1 and 2 in the year-ago quarter.

In its defense and space business, Boeing’s deliveries totaled 25 in first-quarter 2018, down from 42 dispatched in the year-ago period. Total deliveries consisted of 6 AH-64 Apache helicopters (remanufactured) and 8 Chinook helicopters (new and renewed). The company also delivered 4 P-8’s, 5 F/A-18s and 2 F-15s.

Boeing’s total deliveries were 209 units in the first quarter of 2017, compared with 211 a year ago.

What’s Favoring Boeing?

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 and defense business has been gaining traction in recent days, in the form of huge inflow of jet orders from airlines worldwide. The company recently received an order worth $12 billion to deliver 47 787-9 Dreamliners to American Airlines. A week back it also received orders worth $8.8 billion for 75 737 MAX Airplanes from Jet Airways. In terms of its Defense business, Boeing recently secured a $1.2 billion deal to support Kuwait's F/A-18 Jets. Such frequent and large contract wins are surely expected to ramp up production and improve Boeing’s deliveries in the second quarter.

Moreover, in February 2018, President Trump proposed fiscal 2019 defense budget that provisions for an investment plan of $21.7 billion for defense aircrafts. Boeing is expected to gain significantly from this budgetary provision, as it includes an investment plan of $8.5 billion for its varied defense programs.

On the commercial front, 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% of the total projection along with widebody jets, comprising over 20%. This translates into worldwide demand for 29,530 single-aisle jets, worth $3.2 trillion and 8,210 widebody jets, worth $2.5 trillion. Such projections will aid Boeing in maintaining its position as one of the largest aerospace and defense contractor worldwide.

Price Movement

Boeing’s stock has rallied about 87.5% in a year, compared with the broader industry’s gain of 45.7%. The outperformance was primarily led by the robust worldwide demand for its commercial aircraft and for its military jets.

Zacks Rank & Other Stocks to Consider

Boeing currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the same sector are Huntington Ingalls HII, Curtiss-Wright Corporation CW and Northrop Grumman Corporation NOC. While Huntington Ingalls and Curtiss-Wright sport a Zacks Rank #1 (Strong Buy), Northrop Grumman carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Huntington Ingalls recorded an average positive earnings surprise of 3.85% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by $4.94 to $17.38 in the last 90 days.

Curtiss-Wright recorded an average positive earnings surprise of 15.06% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by 60 cents to $5.79 in the last 90 days.

Northrop Grumman recorded an average positive earnings surprise of 16.17% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by $1.43 to $15.52 in the last 90 days.

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