Boeing Shares Soar to Record after ‘Close to Perfect’ Earnings Report
Shares of Boeing Co. rallied to their highest-ever level Wednesday, contributing 117 points to the Dow Jones Industrial Average by midmorning, on the heels of a second-quarter earnings beat and improved outlook.
The stock shot up more than 8%, its largest percentage gain since August 2009, to a high of $230.43, its highest intraday based on data going back more than 40 years. The dollar gain of nearly $17 was the best daily point rise on record. The shares have gained for four straight sessions, and tacked on nearly 10% over that period.
Boeing BA which has outperformed Wall Street estimates in the past five quarters, reported per-share earnings of $2.89, compared with FactSet consensus of $2.58 a share. It narrowly missed sales expectations, but that was offset by raising its 2017 EPS guidance.
Boeing shares are up more than 47% so far this year, compared with gains around 10% for the Dow DJIA of which the stock is a component, and around 11% for the S&P 500 index SPX. The stock is the best performer in the Dow this year, surpassing No. 2 Apple Inc. AAPL up 33% in the period, and McDonald’s Corp. MCD up 30%.
Analysts at Cannacord said they expected the stock’s positive reaction to the company earnings, but remain cautious on Boeing, mostly because of risk around the market for wide-body planes and valuation, they said in a note.
On the positive side, confidence in the commercial and defense markets “has increased, and (Boeing) is clearly outperforming our expectations on cash generation, as well as margin. The company is also benefiting from the lack of new program starts, allowing controlled R&D and investment spending while it increases efficiency on the shop floor,” they said.
For analysts at Vertical Research Partners, free cash flow around $4.5 billion was the highlight of Boeing’s earnings. Boeing did note timing benefits in the quarter, and even after dividends and buybacks, the cash balance grew by $1.1 billion compared with last quarter, the analysts said.
“This is about as close to perfect as it gets from Boeing. A significant cash flow beat, a meaningful increase to guidance from operations, and no execution issues,” they said.