Boeing Soars on Better-Than-Expected Earnings, Raised Guidance

Boeing Co. (BA)  rose on Wednesday, April 25, after the aircraft manufacturing company reported better-than-expected quarterly earnings and raised full-year guidance for three key financial metrics.

The Chicago-based company posted a profit of $4.15 a share. Earnings, adjusted for one-time items, came in at $3.64 a share, handily beating analysts' estimates of $2.58. Revenue of $23.382 billion also topped forecasts calling for $22.278 billion, according to FactSet.

The strong quarterly results, in combination with a positive market outlook, led Boeing to raise its full-year outlook. The company now expects core earnings per share to be between $14.30 and $14.50, up from $13.80 and $14. Operating cash flow is anticipated to be in the range of $15 billion to $15.5 billion, compared to its previous guidance of $15 billion. The operating margin for Boeing's Commercial Airplanes division was raised to 11.5% from 11%.

The raised guidance is "likely to be interpreted as conservativism," since Boeing boosted the outlook by less than the first-quarter beat, RBC Capital Markets analyst Matthew McConnell wrote in a Wednesday morning research note.

"Going forward, we remain focused on our disciplined growth strategy, improved profitability and cash flow to ensure we meet our commitments to our customers and our shareholders," CEO Dennis Muilenburg said in a statement.

Shares of Boeing rose 4.2% to $342.86. 

"These are blow-away numbers for this thing," Kevin O'Leary, the chairman of O'Shares ETFs, said on CNBC. "This thing is a cash flow monster, it's a beast."

O'Leary said Boeing is his largest position.

"Boeing is a really brilliant company, and I think what they did was take a look at what everybody said yesterday that screwed it up and just said we're not the same," TheStreet's founder Jim Cramer said on CNBC.

Boeing's guidance on cash flow was important given that aerospace and defense giant Lockheed Martin Corp. (LMT) expects "negative cash from operations in the second quarter" and did not raise its cash flow guidance, which sent the stock tumbling by more than 6% Tuesday. 

Boeing management said on the conference call that they are "not seeing anything that has a material effect" right now from raw materials costs, and the company remains engaged with its suppliers. The comment comes as the Trump administration plans to implement tariffs on imported steel and aluminum. 

Construction equipment maker Caterpillar Inc. (CAT) said Tuesday that steel will be a headwind all year. 

As for the ongoing U.S.-China trade negotiations, Muilenburg said that he is keeping a very close eye on this and is encouraged by continuing dialogue between the two nations. 

"We know aerospace is important to both countries," Muilenburg told analysts. "Both are seeking to find a negotiated position that will benefit both countries."

Earlier this month, Bernstein analyst Douglas Harned said it would be difficult for China to apply tariffs to the aerospace sector as it "needs planes to support airline growth plans and Airbus is sold out." Recently, China has represented approximately 15% to 20% of Boeing's commercial sales, and about 10% to 15% of total sales, Harned said.

The Boeing CEO said he is hopeful for a positive outcome between the U.S. and China. 

-- This story has been updated to include commentary from the conference call. 

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