Boeing shares slip after its commercial airline revenue and 2018 EPS forecast disappoint

  • The U.S planemaker sticks to its full year 2018 earnings per share guidance of $14.30 to $14.50, below the expected $14.56.
  • The aerospace giant's second-quarter earnings, however, beat Wall Street's expected results for the top and bottom lines.
  • The U.S. aviation company added even more planes to its already immense backlog of orders.

Shares of Boeing declined Wednesday after the company reported revenue in its commercial airline division that fell short of estimates. Its earnings per share forecast for 2018 also disappointed.

The aerospace giant's second-quarter earnings beat Wall Street's expected results for the top and bottom lines. But Boeing stuck to its full year 2018 earnings per share guidance of $14.30 to $14.50, below the $14.56 consensus analyst estimate in a Thomson Reuters survey.

The commercial airplane division reported revenue of $14.48 billion, coming in about $350 million lower than estimates by FactSet. Boeing's core business also took a $307 million hit to its second-quarter operating margin, as the company said it recorded a charge "related to cost growth on the KC-46 Tanker" as Boeing pushes to certify the aircraft for the Air Force by October.

"Tanker was especially complex because of the multiple certifications required," Boeing CEO Dennis Muilenburg said on a conference call with investors after the earnings report. He noted that the KC-46 tanker requires both commercial and military certifications, unlike Boeing's other large airplanes like the 777 model.

"We've completed all of the flight testing for tanker associated with first delivery," Muilenburg said.

Shares of Boeing slipped more than 2 percent in afternoon trading.

The U.S. aviation company added even more planes to its already immense backlog of orders, with the company reporting it now has orders for nearly 5,900 airplanes, worth nearly half a trillion dollars.

Expectations vs. results

  • Adjusted earnings: $3.33 per share vs. $3.26 per share forecast by Thomson Reuters.
  • Revenue: $24.3 billion vs. $24.04 billion forecast by Thomson Reuters.

Boeing improved its adjusted earnings per share and revenue from the same period a year earlier, with the former up
34 percent and the latter up 5 percent.

Boeing continues to expect at least 810 airplane deliveries this year, which would be a company record. It delivered 378 airplanes in the first half of this year, so the company is only about half way to its closely watched goal.

"Still planning to ramp up to [delivering] 57 [737 aircraft] a month next year," Muilenburg said.

The company's stock has risen over 21 percent this year as of Tuesday’s close of $358.27 per share, continuing a climb of nearly 70 percent over 21 months.

Boeing is steadily expanding its range of aircraft. A joint venture with Embraer announced July 5 gave Boeing a controlling stake in the Brazilian planemaker's commercial aircraft arm. The nearly $5 billion deal is set to make Boeing the market leader in regional passenger jets, even as it moves closer to launching its long-anticipated 797 aircraft.

Boeing expanded its order book in the second quarter after bringing home nearly $100 billion in deals at the Farnborough International Airshow.