Aerospace & Defense

Boeing shares surge after monster earnings beat and a record $101 billion in annual revenue

Key Points
  • Boeing reports more than $100 billion in annual revenue for the first time.
  • The aerospace giant also provides a strong 2019 forecast, expecting earnings of $19.90 to $20.10 a share.
  • Boeing's commercial airplanes business delivered a record 806 aircraft last year but the company expects to shatter that in 2019, saying deliveries will climb to 895 to 905 next year.
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Boeing EPS, revenue soars past expectations with record earnings

Dow component Boeing's stock surged Wednesday after the company reported year-end results that smashed Wall Street's expectations, with record revenue and airplane deliveries driving the blowout.

Boeing reported a massive fourth-quarter earnings result of an adjusted $5.48 per share, beating expectations in a Refinitiv survey of analysts by 91 cents. Revenue was also strong, at $28.3 billion — more than $1 billion than analysts expected.

The aerospace giant reported $101.1 billion in annual revenue, breaking the $100 billion mark for the first time. Boeing also provided a strong 2019 forecast. Boeing expects next year's earnings of $19.90 to $20.10 per share. Wall Street was expecting $18.31 a share for full-year 2019 earnings.

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Watch CNBC's full interview with Boeing CEO Dennis Muilenburg

Fourth-quarter earnings from operations jumped 40 percent from a year earlier as margins expanded. The company posted $4.2 billion in earnings from operations, compared with nearly $3 billion a year earlier.

Boeing shares surged 6.3 percent, closing trading at $387.72 a share.

Trade tensions between the U.S. and China have recently rattled Boeing's stock, although the company's shares largely recovered November and December losses in January after several big contract wins.

Chairman and CEO Dennis Muilenburg said the strong 2018 results were driven by Boeing's push to unite the company, with $35 billion invested in "key strategic areas" over the last five years. Muilenburg said the "One Boeing" initiative has made it a more cohesive organization, giving the company "confidence for continued strong performance, revenue expansion and solid execution across all three businesses."

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Why Airbus and Boeing dominate 99% of the large plane market

Boeing's commercial airplanes business delivered a record 806 aircraft last year, just shy of the 810 that Boeing forecast in the third quarter. The company expects to shatter that record in 2019, saying deliveries will reach 895 to 905 next year.

"That's double-digit growth," Jefferies analyst Sheila Kahyaoglu said on CNBC's "Squawk Box." "About 100 basis points of improvement across each segment and these are big divisions. So, tons of productivity going through."

The jet-making unit's operating profit increased to 15.6 percent in the fourth quarter, compared with 11.6 percent a year earlier. The division also added 262 net orders, with the company's total backlog holding steady at over 5,900 airplane orders worth $412 billion.

The company's high-margin services business continued to grow, with revenues up 29 percent from the previous year to $4.9 billion.

"The story is in place and they have the cash to deploy as well," Kahyaoglu said. "We view any pullback as an opportunity on the stock."

Boeing's defense unit saw a $6.1 billion fourth-quarter revenue increase driven by a rise in volume across F/A-18 fighter jets, satellites and weapon programs. As the world's second largest defense firm, Boeing bagged a significant number of Pentagon contracts last year. In September alone, Boeing was awarded more than 20 contracts with a cumulative value of $13.7 billion.

Boeing clinched $805 million for the Navy's MQ-25 aerial refueling drone, $9.2 billion for the Air Force's T-X Trainer, $2.4 billion for the UH-1N helicopter replacement and $3.9 billion for twin Air Force One aircraft.

Boeing also delivered the long-delayed KC-46 tanker to the Air Force last week. The two aircraft, derived from Boeing's commercial 767 frame, touched down at McConnell Air Force Base in Kansas on Friday after departing the company's Everett, Washington, facility.

Boeing's KC-46 tanker for the U.S. Air Force.
Boeing

The delivery marks a major milestone for the program, which is two years behind schedule and more than $3 billion over budget. The aerospace giant is expected to build 179 refueling aircraft to replace the Air Force's aging tanker fleet.