Wednesday, April 22, 2015

Will Boeing beat analyst estimates today?


World's largest aircraft manufacturer will be publishing its Q1 2015 results today before the opening bell. With order books standing at record highs it is interesting to see how aircraft manufacturers turn this robust order backlog into profit, returning value to investors.
Boeing shares had a weak 2014, after a strong 2013 run. In 2015 the stock jumped but showed very little price movement after that.


What investors and analysts will be looking at

Investors probably will be looking at free cash flow as well as the progress on making the Dreamliner production less costly. The program is expected to break-even on production somewhere this year, after which every Dreamliner rolling out of the Boeing factories will return profit to Boeing. 
Another attention point will be the Boeing 777 program. It will be interesting to see whether Boeing executives are still convinced to close the gap in the program.
The Defense unit has been weak, but Boeing expected strong demand from Asia boosting the Defense unit. Operating margin of the Defense unit will be eyeballed by investors and analysts.



Higher production rates

To meet market demand Boeing already has announced higher production rates, The higher production rates should make it more attractive to order aircraft, while also boosting quarter results.

The order books are robust, but value for investors lies more in the production rate and the operating margins. More can be read about that here



History of beating consensus

According to an article written by Quantified Alpha Boeing beat the EPS consensus 12 quarters in a row and beat consensus on revenue 8 out of 10 times. This shows strong performance, as well as light guidance by the Boeing management. 


Update:


Boeing reported the following result:
Core EPS (non-GAAP) rose 12% to $1.97 on strong operating performance; GAAP EPS of $1.87 (STRONG BEAT)
Revenue increased 8 percent to $22.1 billion reflecting higher commercial deliveries (MISS)

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