By Julie Johnsson
Boeing shares gained after the largest US industrial company smashed profit estimates and boosted the forecast for this year’s cash and earnings.
The strong performance in a traditionally weak quarter for plane makers reassured investors, spooked by Caterpillar that perhaps the market hasn’t peaked for all US manufacturers.
“There are broader concerns with trade and companies calling the top of the market,” Ken Herbert, an aerospace analyst at Canaccord Genuity, said. “But this was very clean and strong.”
The robust results underscored the strengths that made Boeing the best performer on the Dow Jones Industrial Average for most of the past year.
The company was recently dethroned by Cisco Systems as President Trump’s trade salvos rattled markets.
Investors sold off Boeing as aluminum prices went on a wild ride, and again when China threatened penalties for the 737, Boeing’s largest source of profit.
The shares climbed almost 3% at one stage in New York, for a gain of over 15% this year and free cash flow climbed to $2.74bn (€2.24bn) the Chicago-based firm said.
That topped the average analyst estimate of $1.49bn (€1.22bn), a sign the company’s underlying business remains healthy.
Adjusted earnings rose to $3.64 (€2.99), handily beating the $2.58 (€2.12) average of estimates. Revenue increased 6.5% to $23.4bn (€19.2bn); analysts had predicted $22.2bn (€18.2bn).
“Well it’s not every day that a mega-cap company beats consensus by 40%,”
Robert Stallard, an analyst with Vertical Research Partners said. But crushing consensus estimates, “by such a large amount also raises the risk that Boeing’s guidance will be increasingly ignored,” he said.
There are signs of strain, however, as engine makers and other suppliers struggle to keep pace with the record production tempo for the single-aisle 737.
The company spent $3bn (€2.45bn) during the quarter repurchasing 8.9 million shares.