Boeing Co (NYSE: BA) stock dropped nearly 3 percent on Wednesday after the company issued full-year earnings guidance that fell short of Wall Street expectations. Investors are concerned about the impact the trade war is having on Boeing’s international business, but analysts say Boeing’s strong balance sheet should help support the stock.
Boeing reported second-quarter earnings per share of $3.33 on revenue of $24.3 billion. Both numbers topped consensus analyst estimates of $3.26 and $24.04 billion, respectively. Revenue was up 5 percent compared to a year ago.
However, Boeing investors took profits on the stock’s nearly 70 percent one-year gain on Wednesday morning after the company issued a full-year EPS guidance range of between $14.30 and $14.50. Analysts had been expecting $14.56.
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Boeing also raised its full-year revenue guidance by $1 billion to a new range of between $97 billion and $99 billion. Second-quarter numbers included a $307 million charge related to Boeing’s KC-46 Tanker program.
“In the quarter, we generated improved revenue and earnings, delivered strong cash and captured $27 billion in new orders,” CEO Dennis Muilenburg says in a statement.
Boeing reported 194 commercial airplane deliveries and operating cash flow of $4.7 billion on the quarter. Boeing’s backlog grew to $488 billion and now includes nearly 5,900 commercial planes.
Boeing’s commercial airplane division reported revenue of $14.48 billion, missing consensus estimates of $14.83 billion. Commercial airplane operating margin was 11.4 percent, up from 9 percent a year ago.
Bank of America analyst Ronald Epstein says he isn’t concerned about the trade war’s impact on Boeing’s long-term business, and Boeing’s fundamentals are strong.
“Boeing’s ability to extract cash from its own business and deploy capital through share buybacks and dividends outweigh long-term cyclical headwinds at this point,” Epstein says.
Boeing spent $3 billion to repurchase 8.6 million shares of stock in the second quarter.
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“Strong air traffic is bolstering demand for Boeing commercial aircraft, while a global upturn in defense spending is driving defense,” Epstein says.
Bank of America has a “buy” rating and $450 price target for BA stock.
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Boeing Co Guidance Comes Up Short; BA Stock Tumbles originally appeared on usnews.com
