Boeing Investors React to Comments by Delta's CEO
New moves
During 3Q15, Boeing (BA) saw lower new orders with virtually no orders in September. However, in September Boeing announced the development of a new 737 assembly facility in China in partnership with the Commercial Aircraft Corporation of China Ltd. This is the company’s first production site abroad. It aims to strengthen the company’s position in the growing Chinese and Asian market. It would also act as a cushion against Congress’ refusal to renew the charter of the US Import-Export Bank—a move that’s expected to undermine foreign orders.
Boeing is the largest commercial jet manufacturer in the US. It’s the world’s second-largest manufacturer behind Airbus. It’s also the second-largest defense contractor in the US behind Lockheed Martin (LMT). It’s followed by Raytheon (RTN), General Dynamics (GD), and Northrop Grumman (NOC). Boeing forms ~5% of the Industrial Select Sector SPDR ETF (XLI).
Analysts’ estimates
For 3Q15, analysts are estimating both Boeing’s sales and EBITDA (earnings before interest, tax, depreciation, and amortization) to rise by ~4% to $24,675 million and $2,703 million, respectively. The EPS (earnings per share) is expected to grow by 3% to $2.20.
For 2015, sales are expected to grow by 5%. However, this is expected to fall to 2% and 3% growth in 2016 and 2017, respectively. Boeing’s sales closely track the airline industry with some lag effect. It’s important to note that 2014 and 2015 were great years for airlines. Fuel prices touched their all-time lows. This boosted airline profits. Rising demand and profitability led to airlines increasing capacity growth. This meant higher orders for Boeing and Airbus. Since most airlines now are cutting down capacity growth, Boeing’s revenue is naturally expected to follow suit.
For 2015, the EBITDA is expected to grow by 8%. This is expected to continue in 2016. It’s expected to slow down to 2% in 2017. The EPS is expected to fall by 6% for 2015. Then, it’s expected to rise by 16% in 2016 and 11% in 2017.
Among the 16 analysts that track the company’s performance, 11 of them gave the company a rating of strong “buy,” four rated it a “hold,” and only one analyst gave it a strong “sell” rating.
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