Boeing (BA) Q3 Defense Deliveries Soar Y/Y On Solid Orders

The Boeing Company (NYSE:BA) recently revealed delivery figures from its commercial and defense operations for the third quarter of 2019. Although the company’s commercial shipments witnessed a significant plunge, defense shipments reflected a massive 208% surge from the previous year.

Q3 Orders & Deliveries

Boeing’s defense and space unit deliveries totaled 77 in third-quarter 2019 compared with 25 dispatched in the year-ago period. Total deliveries consisted of 38 AH-64 Apache (NYSE:APA) (both new and remanufactured), 13 CH-47 Chinook helicopters (new and renewed), and six P-8’s and six F/A-18 military aircraft. Deliveries also included nine KC-46 tankers, two F-15 military aircraft and one C-17 Globemaster III military transport aircraft.

Boeing delivered a total of 140 units in the third quarter of 2019 compared to 215 in the year-ago quarter. On a year-to-date basis, the company has delivered 174 defense products.

Factors Behind Solid Defense Deliveries

The third quarter of 2019 was productive in terms of defense deliveries, as Boeing’s Defense, Space & Security (BDS) segment continued to receive a smooth flow of contracts from the Pentagon. Its third-quarter defense deliveries grew from that in the previous year’s quarter, courtesy of the prolonged geopolitical turmoil that has been looming over the Middle East for quite some time now. Evidently, the demand for fighter jets, aircraft components and other critical defense products continues to escalate.

The diplomatic issues and conflicts between Qatar and Saudi Arabia were one of the incidents that the company's defense business. Such conflicts led the Qatar government to buy military aircraft from Boeing to strengthen the country’s defense system and adopt appropriate countermeasures at the time of crisis. Notably, the Qatar Emiri Air Force (QEAF), in August 2018, ordered 36 F-15QA Eagle multi-role fighters from the company, worth $6.2 billion.

On the flip side, Saudi Arabia, in the past couple of years, has faced geopolitical threats from neighboring nations like Iran, Yemen and Qatar. In line with this, President Trump signed a massive $110- billion arms deal with Saudi Arabia in May 2017. Post this deal, Boeing won a $223-million contract from Saudi Arabia for supplying CH-47F helicopters along with other deals. Furthermore, last year, Boeing signed an agreement with Saudi Arabia to help it build rotary-wing military aircraft, which are expected to generate $22 billion in revenues.

Such huge orders, back then, may have boosted the company's delivery figures during the third quarter.

Price Movement

Boeing’s stock has gained about 2.1% in a year compared with the industry’s growth of 4.7%.

Zacks Rank & Key Picks

Boeing currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the same sector are Lockheed Martin Corporation (NYSE:LMT) , Heico Corporation (NYSE:HEI) and Teledyne Technologies Incorporated (NYSE:TDY) . While Teledyne Technologies sports a Zacks Rank #1 (Strong Buy), Lockheed Martin and Heico Corporation carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Lockheed Martin came up with average positive earnings surprise of 16.03% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has increased 0.52% to $21.22 in the past 60 days.

Heico came up with average positive earnings surprise of 10.07% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has risen 3.1% to $2.31 over the past 60 days.

Teledyne Technologies came up with average positive earnings surprise of 9.26% in the last four quarters. Its long-term growth estimates currently stand at 7.5%.

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