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Boeing stock jumps 7 percent as earnings beat analysts' predictions

by Tara Lachapelle
Jan 27, 2010


Tara Lachapelle/MEDILL

Boeing Co. returned to profitability in the fourth quarter.

Boeing Co. stock jumped 7 percent as the company swung to a fourth-quarter profit Wednesday on higher sales, in part due to large military contracts, and improved profit margins in its commercial airplane group, which was hurt in 2008 by a lengthy mechanics' strike. The earnings easily beat Wall Street's expectations.

The Chicago-based company earned $1.3 billion, or $1.75 per diluted share, compared with a loss of $86 million, or 12 cents per diluted share, in the year-earlier quarter.

According to Bloomberg LP, analysts estimated earnings of $1.37 per diluted share.

Fourth-quarter sales increased 42 percent to $17.9 billion from $12.7 billion after delivering 122 commercial airplanes in the fourth quarter. A total of 481 planes were delivered in 2009.

“We put a strong finish on 2009 by getting the [Dreamliner] 787 in the air and generating solid core operating performance across the company,” CEO Jim McNerney said in a conference call Wednesday.

Chief Financial Officer James Bell said that while he expects operating cash flow to be approximately zero in 2010 as the company continues an inventory buildup, it should return to about $5 billion in 2011 after deliveries of the Dreamliner 787 and 747-8 freighter commence.

“Boeing did have a very solid quarter, and while their outlook was slightly lower than what I was looking for, much of that is explained with respect to some weak expectations with their defense segment,” said Morningstar Inc. analyst Brian Nelson. “I think the market had been expecting some bad news, but that didn’t happen. They’re holding production constant, which is what has been on everybody’s minds.”

Boeing estimated 2010 sales to be between $64 billion and $66 billion, and earnings to rise to $3.70 per diluted share to $4 per diluted share.

The company’s full-year earnings declined 51 percent to $1.3 billion, or $1.84 per diluted share, from $2.7 billion, or $3.67 per diluted share, in 2008, while full-year sales increased 12 percent to a record $68.3 billion from $61 billion in 2008.

The stock closed Wednesday at $61.93, up $4.22.