Boeing (BA) is getting a big lift after reporting strong fourth-quarter earnings on Wednesday morning.
The company reported record revenue of $28.3 billion in the quarter, flying past estimates of $26.86 billion, and record earnings per share of $5.48, soaring over analysts estimates pegged at $4.57.
Chicago-based Boeing forecast further growth in 2019, guiding for a record-breaking $109.5 billion to $111.5 billion in revenue and acceleration in EPS to between $19.90 a share and $20.10 a share for the year, well past the expected $18.31 on Wall Street.
The aerospace-and-defense leader touted "higher volume across all businesses" for the estimate-outpacing results and outlook.
Shares of the biggest stock in the Dow Jones Industrial Average shot up 5% on news of the big earnings beat and continue to rise in early trading as the bullish outlook for 2019 is digested.
"Across the enterprise our team delivered strong core operating performance and customer focus, driving record revenues, earnings and cash flow and further extending our global aerospace industry leadership in 2018," CEO Dennis Muilenburg said in a statement.
Booking International Profits
Muilenberg added that the company is seizing on non-U.S. opportunities, even amidst macroeconomic headwinds.
"Our One Boeing focus, clear strategies for growth, and leading positions in large and growing markets, give us confidence for continued strong performance, revenue expansion and solid execution across all three businesses, which is reflected in our 2019 guidance," he explained.
The Global Services division was awarded F-15 plane contracts for Qatar and was selected by Shenzhen Airlines to provide crew management solutions, the first inroads the company is making with its Boeing AnalytX-powered services in China.
The company also completed its first MAX plane delivery from its China Completion Center.
The performance in China is especially encouraging as trade talks kick off in Washington Wednesday between the U.S. and China. An American standby successfully outsourcing to China and inking partnerships in the nation against a difficult backdrop adds bullishness to Boeing results should the trade tensions be tempered in the week's talks.
Defensive Play
Boeing was certainly bolstered by its performance in defense, where it counts itself as the biggest player in the world.
The unit saw $6.1 billion fourth-quarter revenue driven by higher volume across F/A-18 fighter jets, satellites, and weapon programs.
The company has certainly been the Pentagon's top pick, having been awarded billions in new contracts and even found one of its own executives at the top of the nation's defense apparatus.
I am pleased to announce that our very talented Deputy Secretary of Defense, Patrick Shanahan, will assume the title of Acting Secretary of Defense starting January 1, 2019. Patrick has a long list of accomplishments while serving as Deputy, & previously Boeing. He will be great!
— Donald J. Trump (@realDonaldTrump) December 23, 2018
Notably, the company was awarded an $805 million contract in August for its Stingray drones, overcoming competition from Lockheed Martin (LMT) and General Atomics, and a massive $9.2 billion contract for the Air Force's T-X training jet program.
Boeing could potentially garner more contracts from the DoD as Defense Secretary Patrick Shanahan talks about a "space force."
The executive branch has been forwarding the idea since mid-2018, when Vice President Pence first announced plans to expand a fifth branch of the military.
"The time has come to establish the United States Space Force," Pence said in August, shortly after the disclosure of a management structure report for the proposed program.
The new branch will be separate from, but equal to, the five other branches, he said.
"To be sure, the Space Force will not be built from scratch, because the men and women who run and protect our nation's space programs today are already the best in the world," Pence clarified.
Terrestrially, the company also reached beyond the aerospace leader's U.S. base to more easily reachable targets than space.
"During the quarter, Defense, Space & Security was awarded contracts for the second KC-46 Tanker to Japan, a joint ground system to provide tactical satellite communications for the U.S. Air Force and to modernize 17 Chinooks for Spain," the earnings release states. "Backlog at Defense, Space & Security was $57 billion, of which 30 percent represents orders from customers outside the U.S."
Defending Shareholders
The strong results and bullish outlook are bolstered by a well-fortified financial profile that will allow the traditional cash cow to continue returning capital to shareholders.
"Our financial performance provided a firm platform to further invest in new growth businesses, innovation and future franchise programs, as well as in our people and enabling technologies," Muilenberg commented. "In the last 5 years, we have invested nearly $35 billion in key strategic areas of our business, all while increasing cash returns to shareholders."
Based on strong cash generation and bullish 2019 outlook, the company increased the quarterly dividend per share by 20 percent and authorized a $20 billion share repurchase program in December.
BA's dividend has been hiked 325% over the past six years, increasing interest in the company's ability to return even more to shareholders in 2019.
An earnings call is anticipated for 10:30 a.m., where Muilenberg and his executive team will be able to elaborate further on their plans for utilizing its massive cash hoard.
