Boeing Co (NYSE: BA) stock fell 2.3% on July 25th, 2018 (as of 1:04 PM GMT-4; Source: Google finance) after the company issued full-year earnings guidance that fell short of Wall Street expectations due to its defense business margins, citing $426 million in higher costs on its long-delayed KC-46 aerial refueling tanker program. Though the company has reported better-than-expected profit and revenue for the second quarter. Investors are concerned about the impact the trade war is having on Boeing’s international business. Boeing reported 194 commercial airplane deliveries and operating cash flow of $4.7 billion on the quarter. Boeing’s backlog grew to $488 billion and now includes nearly 5,900 commercial planes.
BA in the second quarter of FY 18 has reported the adjusted earnings per share of $3.33, beating the analysts’ estimates for the adjusted earnings per share of $3.26. The company had reported the adjusted revenue growth of 5 percent to $24.3 billion in the second quarter of FY 18, beating the analysts’ estimates for revenue of $24.04 billion. Second-quarter numbers included a $307 million charge related to Boeing’s KC-46 Tanker program. Boeing’s commercial airplane division has reported revenue of $14.48 billion, missing consensus estimates of $14.83 billion. Commercial airplane operating margin was 11.4 percent, up from 9 percent a year ago. BA has booked 239 net orders during the second quarter, including 91 wide-body jets.
Moreover, the operating margins in its defense, space and security unit declined to 9.3 percent in the second quarter from 11.9 percent a year earlier, due to increased costs of $111 million in the KC-46 Tanker. Further, the KC-46 U.S. Air Force aerial refueling program has cost an additional $426 million before taxes as the company works through test delays and production changes. Boeing has already tallied some $3 billion in total costs on the program, which is a derivative of its 767 commercial aircraft. Meanwhile, the first delivery of the KC-46 would be in October, more than two years behind schedule.
BA expects 2018 core earnings of $14.30 to $14.50 per share, unchanged from the same period last year, but below the Wall Street estimate of $14.56 per share. Core earnings exclude some pension and other costs. For the full year 2018, the company expects total revenue of $97 billion to $99 billion, compared with its previous estimate of $96 billion to $98 billion.
In the second quarter 2018, BA spent $3 billion to repurchase 8.6 million shares
Meanwhile, Bank of America has a “buy” rating and $450 price target for BA stock.