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Strong aircraft demand and the improving profitability of its 787 Dreamliner family have driven incredible earnings and cash flow growth at Boeing (NYSE: BA) in recent years.
This upward trajectory continued in 2018, despite production delays at an engine supplier that slowed Boeing 737 MAX output for much of the year. Boeing capped off its most successful year yet earlier this week with a strong Q4 earnings report. Furthermore, the aerospace giant forecast that earnings and cash flow will reach new heights in 2019. As a result, Boeing stock jumped 6% on Wednesday, approaching the all-time high it reached last year.
Boeing Stock Performance, data by YCharts.
Boeing smashes its forecasts, as usual
Boeing's growth rate accelerated last quarter, as the company did its best to catch up on aircraft production following delays earlier in the year. Boeing still missed its forecast of delivering 810 to 815 commercial jets in 2018 -- it delivered 806 -- but Boeing's fourth-quarter delivery total rose 14% year over year, driving a 12% revenue increase in its commercial airplanes segment.
The defense and services segments also grew at double-digit rates last quarter. As a result, revenue rose 14% year over year to $28.3 billion. For the full year, Boeing generated $101.1 billion of revenue. That was up nearly 8% year over year and comfortably beat the company's most recent guidance range of $98 billion to $100 billion.
The acceleration in revenue growth enabled Boeing to blow past its earnings forecast. Core earnings per share reached $5.48 last quarter, bringing full-year core EPS to $16.01: up 30% year over year. Boeing's most recent guidance had called for core EPS between $14.90 and $15.10, and its initial outlook for 2018 had projected that core EPS would come in between $13.80 and $14.00.
Image source: Boeing.
Not surprisingly, Boeing also surpassed its forecast for free cash flow. At the beginning of 2018, management had expected full-year free cash flow of approximately $12.8 billion. Free cash flow ultimately reached $13.6 billion.
The 2019 outlook is spectacular
Boeing is carrying great momentum into 2019, and management doesn't expect that to stop. For the upcoming year, Boeing is projecting revenue of $109.5 billion to $111.5 billion, which would represent 8% to 10% growth. The commercial airplanes division will drive most of that increase.
Meanwhile, Boeing expects core EPS to surge roughly 25% to a range of $19.90 to $20.10: well ahead of the analyst consensus of $18.31. (And if history is a guide, Boeing's guidance could prove to be conservative.) Finally, the company's cash flow forecast implies that free cash flow will rise about 10% to a range of $14.7 billion to $15.2 billion.