Event: Aircraft maker Boeing (BA) reported earnings results before the market opened Wednesday, saying it earned $1.35 per share for the quarter ending September. Analysts on average were looking for a profit of $1.13 per share. Revenues came in at $20 billion, thanks to improving defense business and an increase in commercial aircraft deliveries. Boeing also raised guidance for the full year to a range of $4.80 to $4.95 per share. Previously the expectation was for a profit range of $4.40 to $4.60 per share. Investors cheered the news, sending shares of Boeing higher by nearly 3% in premarket trading.
Analysis: Investors must be fit to be tied. Across the board, companies are releasing earnings that are disappointing investors with reductions on the top line becoming endemic. Along comes Boeing, increasing margins and showing improving sales strong enough to boost estimates for the rest of the year. The airline business is booming and with stronger results from its defense division, Boeing seems poised for strong earnings irrespective of economic conditions. Of course Boeing cannot stay immune to what ails the rest of the world in perpetuity. In fact, one could argue this may be the peak for Boeing. Industrial companies for the most part have been reporting results that miss on the top line. Declining sales is never a good thing and such a state ultimately impacts companies across all industries over time. The two things helpful to Boeing in the long term will be central bank interventions to stem the tide of a slowing global economy and a relatively low valuation.
Action: Boeing is your classic hold at this point. Don’t expect big moves in the short run; the downside is limited. If the global economy reverses course for the positive, the long term is likely to be positive for Boeing.
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